Union Calendar No. 464

103D CONGRESS

2D SESSION H. R. 5116

[Report No. 103–835]

A BILL

To amend title 11 of the United States Code.

OCTOBER 4, 1994

Reported with an amendment, committed to the Commitordered to be printed tee of the Whole House on the State of the Union, and
IB

Union Calendar No. 464

103D CONGRESS

1ST SESSION H. R. 5116

[Report No. 103–835]

To amend title 11 of the United States Code.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 28, 1994

Mr. BROOKS (for himself, Mr. FISH, and Mr. SYNAR) introduced the following

bill; which was referred to the Committee on the Judiciary

OCTOBER 4, 1994

Reported with an amendment, committed to the Committee of the Whole

House on the State of the Union, and ordered to be printed

[Strike out all after the enacting clause and insert the part printed in italic]

[For text of introduced bill, see copy of bill as introduced on September 28, 1994]

A BILL

To amend title 11 of the United States Code.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Bankruptcy Amendments of 1994’’.
2

•HR 5116 RH

1 (b) TABLE OF CONTENTS.—The table of contents is as

2 follows:

Sec. 1. Short title.

TITLE I—IMPROVED BANKRUPTCY ADMINISTRATION

Sec. 101. Expedited hearing on automatic stay.

Sec. 102. Jurisdiction to review interlocutory orders increasing or reducing certain time periods for filing plan.

Sec. 103. Expedited procedure for reaffirmation of debts.

Sec. 104. Powers of bankruptcy courts.

Sec. 105. Participation by bankruptcy administrator at meetings of creditors and

equity security holders.

Sec. 106. Definition relating to eligibility to serve on chapter 11 committees.

Sec. 107. Increased incentive compensation for trustees.

Sec. 108. Dollar adjustments.

Sec. 109. Premerger notification.

Sec. 110. Allowance of creditor committee expenses.

Sec. 111. Supplemental injunctions; settlement of claims and demands for payment.

Sec. 112. Authority of bankruptcy judges to conduct jury trials in civil proceedings.

Sec. 113. Sovereign immunity.

Sec. 114. Service of process in bankruptcy proceedings on an insured depository

institution.

Sec. 115. Meetings of creditors and equity security holders.

Sec. 116. Tax assessment.

Sec. 117. Additional trustee compensation.

TITLE II—COMMERCIAL BANKRUPTCY ISSUES

Sec. 201. Aircraft equipment and vessels; rolling stock equipment.

Sec. 202. Limitation on liability of non-insider transferee for avoided transfer.

Sec. 203. Perfection of purchase-money security interest.

Sec. 204. Continued perfection.

Sec. 205. Rejection of unexpired leases of real property or timeshare interests.

Sec. 206. Contents of plan.

Sec. 207. Priority for independent sales representatives.

Sec. 208. Exclusion from the estate of interests in liquid and gaseous hydrocarbons transferred by the debtor pursuant to production payment agreements.

Sec. 209. Seller’s right to reclaim goods.

Sec. 210. Investment of money of the estate.

Sec. 211. Election of trustee under chapter 11.

Sec. 212. Rights of partnership trustee against general partners.

Sec. 213. Exclusion from the estate of certain accounts and chattel paper.

Sec. 214. Impairment of claims and interests.

Sec. 215. Protection of security interest in post-petition rents.

Sec. 216. Amendment to definition of swap agreement.

Sec. 217. Limitation on avoiding powers.

Sec. 218. Small businesses.

Sec. 219. Single asset real estate.

Sec. 220. Leases of personal property.

Sec. 221. Exemption for small business investment companies.
3

•HR 5116 RH

Sec. 222. Payment of taxes with borrowed funds.

Sec. 223. Return of goods.

Sec. 224. Proceeds of money order agreements.

Sec. 225. Airport leases.

Sec. 226. Trustee duties.

Sec. 227. Notices to creditors.

TITLE III—CONSUMER BANKRUPTCY ISSUES

Sec. 301. Period for curing default relating to principal residence.

Sec. 302. Nondischargeability of fine under chapter 13.

Sec. 303. Impairment of exemptions.

Sec. 304. Protection of child support and alimony.

Sec. 305. Interest on interest.

Sec. 306. Exception to discharge.

Sec. 307. Payments under chapter 13.

Sec. 308. Bankruptcy petition preparers.

Sec. 309. Fairness to condominium and cooperative owners.

Sec. 310. Nonavoidability of fixing of lien on tools and implements of trade, animals, and crops.

Sec. 311. Conversion of case under chapter 13.

Sec. 312. Bankruptcy fraud.

Sec. 313. Protection against discriminatory treatment of applications for student

loans.

TITLE IV—GOVERNMENTAL BANKRUPTCY ISSUES

Sec. 401. Exception from automatic stay for post-petition property taxes.

Sec. 402. Municipal bankruptcy.

TITLE V—TECHNICAL CORRECTIONS

Sec. 501. Amendments to bankruptcy definitions, necessitated by enactment of

Public Law 101–647.

Sec. 502. Title 28 of the United States Code.

TITLE VI—BANKRUPTCY REVIEW COMMISSION

Sec. 601. Short title.

Sec. 602. Establishment.

Sec. 603. Duties of the commission.

Sec. 604. Membership.

Sec. 605. Compensation of the commission.

Sec. 606. Staff of commission; experts and consultants.

Sec. 607. Powers of the commission.

Sec. 608. Report.

Sec. 609. Termination.

Sec. 610. Authorization of appropriations.

TITLE VII—SEVERABILITY; EFFECTIVE DATE; APPLICATION OF

AMENDMENTS.

Sec. 701. Severability.

Sec. 702. Effective date; application of amendments.
4

•HR 5116 RH

1 TITLE I—IMPROVED

2 BANKRUPTCY ADMINISTRATION

3 SEC. 101. EXPEDITED HEARING ON AUTOMATIC STAY.

4 The last sentence of section 362(e) of title 11, United

5 States Code, is amended—

6 (1) by striking ‘‘commenced’’ and inserting ‘‘con7 cluded’’, and

8 (2) by inserting before the period at the end the

9 following:

10 ‘‘, unless the 30-day period is extended with the consent of

11 the parties in interest or for a specific time which the court

12 finds is required by compelling circumstances’’.

13 SEC. 102. JURISDICTION TO REVIEW INTERLOCUTORY OR14 DERS INCREASING OR REDUCING CERTAIN

15 TIME PERIODS FOR FILING PLAN.

16 Section 158(a) of title 28, United States Code, is

17 amended by striking ‘‘from’’ the first place it appears and

18 all that follows through ‘‘decrees,’’, and inserting the follow19 ing:

20 ‘‘(1) from final judgments, orders, and decrees;

21 ‘‘(2) from interlocutory orders and decrees issued

22 under section 1121(d) of title 11 increasing reducing

23 the time periods referred to in section 1121 of such

24 title; and
5

•HR 5116 RH

1 ‘‘(3) with leave of the court, from other interlocu2 tory orders and decrees;’’.

3 SEC. 103. EXPEDITED PROCEDURE FOR REAFFIRMATION OF

4 DEBTS.

5 (a) REAFFIRMATION.—Section 524(c) of title 11, Unit6 ed States Code, is amended—

7 (1) in paragraph (2)—

8 (A) by inserting ‘‘(A)’’ after ‘‘(2)’’,

9 (B) by adding ‘‘and’’ at the end, and

10 (C) by inserting after subparagraph (A), as

11 so designated, the following:

12 ‘‘(B) such agreement contains a clear and

13 conspicuous statement which advises the debtor

14 that such agreement is not required under this

15 title, under nonbankruptcy law, or under any

16 agreement not in accordance with the provisions

17 of this subsection;’’, and

18 (2) in paragraph (3)—

19 (A) in the matter preceding subparagraph

20 (A) by striking ‘‘such agreement’’ the last place

21 it appears,

22 (B) in subparagraph (A)—

23 (i) by inserting ‘‘such agreement’’ after

24 ‘‘(A)’’, and

25 (ii) by striking ‘‘and’’ at the end,
6

•HR 5116 RH

1 (C) in subparagraph (B)—

2 (i) by inserting ‘‘such agreement’’ after

3 ‘‘(B)’’, and

4 (ii) by adding ‘‘and’’ at the end, and

5 (3) by adding at the end the following:

6 ‘‘(C) the attorney fully advised the debtor of

7 the legal effect and consequences of—

8 ‘‘(i) an agreement of the kind specified

9 in this subsection; and

10 ‘‘(ii) any default under such an agree11 ment;’’.

12 (b) EFFECT OF DISCHARGE.—The third sentence of

13 section 524(d) of title 11, United States Code, is amended

14 in the matter preceding paragraph (1) by inserting ‘‘and

15 was not represented by an attorney during the course of

16 negotiating such agreement’’ after ‘‘this section’’.

17 SEC. 104. POWERS OF BANKRUPTCY COURTS.

18 (a) STATUS CONFERENCES.—Section 105 of title 11,

19 United States Code, is amended by adding at the end the

20 following:

21 ‘‘(d) The court, on its own motion or on the request

22 of a party in interest, may—

23 ‘‘(1) hold a status conference regarding any case

24 or proceeding under this title after notice to the par25 ties in interest; and
7

•HR 5116 RH

1 ‘‘(2) unless inconsistent with another provision

2 of this title or with applicable Federal Rules of Bank3 ruptcy Procedure, issue an order at any such con4 ference prescribing such limitations and conditions as

5 the court deems appropriate to ensure that the case is

6 handled expeditiously and economically, including an

7 order that—

8 ‘‘(A) sets the date by which the trustee must

9 assume or reject an executory contract or

10 unexpired lease; or

11 ‘‘(B) in a case under chapter 11 of this

12 title—

13 ‘‘(i) sets a date by which the debtor, or

14 trustee if one has been appointed, shall file

15 a disclosure statement and plan;

16 ‘‘(ii) sets a date by which the debtor, or

17 trustee if one has been appointed, shall so18 licit acceptances of a plan;

19 ‘‘(iii) sets the date by which a party in

20 interest other than a debtor may file a plan;

21 ‘‘(iv) sets a date by which a proponent

22 of a plan, other than the debtor, shall solicit

23 acceptances of such plan;
8

•HR 5116 RH

1 ‘‘(v) fixes the scope and format of the

2 notice to be provided regarding the hearing

3 on approval of the disclosure statement; or

4 ‘‘(vi) provides that the hearing on ap5 proval of the disclosure statement may be

6 combined with the hearing on confirmation

7 of the plan.’’.

8 (b) ABSTENTION.—Section 1334 of title 28, United

9 States Code, is amended—

10 (1) by redesignating subsection (d) as subsection

11 (e), and

12 (2) in the second sentence of subsection (c)(2)—

13 (A) by inserting ‘‘(other than a decision not

14 to abstain in a proceeding described in sub15 section (c)(2))’’ after ‘‘subsection’’, and

16 (B) by striking ‘‘Any’’ and inserting the fol17 lowing:

18 ‘‘(d) Any’’.

19 (c) ESTABLISHMENT, OPERATION, AND TERMINATION

20 OF BANKRUPTCY APPELLATE PANEL SERVICE.—Section

21 158(b) of title 28, United States Code, is amended—

22 (1) by striking paragraphs (3) and (4),

23 (2) by redesignating paragraph (2) as para24 graph (4),
9

•HR 5116 RH

1 (3) by striking paragraph (1) and inserting the

2 following:

3 ‘‘(1) The judicial council of a circuit shall establish

4 a bankruptcy appellate panel service composed of bank5 ruptcy judges of the districts in the circuit who are ap6 pointed by the judicial council in accordance with para7 graph (3), to hear and determine, with the consent of all

8 the parties, appeals under subsection (a) unless the judicial

9 council finds that—

10 ‘‘(A) there are insufficient judicial resources

11 available in the circuit; or

12 ‘‘(B) establishment of such service would result

13 in undue delay or increased cost to parties in cases

14 under title 11.

15 Not later than 90 days after making the finding, the judi16 cial council shall submit to the Judicial Conference of the

17 United States a report containing the factual basis of such

18 finding.

19 ‘‘(2)(A) A judicial council may reconsider, at any

20 time, the finding described in paragraph (1).

21 ‘‘(B) On the request of a majority of the district judges

22 in a circuit for which a bankruptcy appellate panel service

23 is established under paragraph (1), made after the expira24 tion of the 1-year period beginning on the date such service

25 is established, the judicial council of the circuit shall deter-
10

•HR 5116 RH

1 mine whether a circumstance specified in subparagraph (A)

2 or (B) of such paragraph exists.

3 ‘‘(C) On its own motion, after the expiration of the

4 3-year period beginning on the date a bankruptcy appellate

5 panel service is established under paragraph (1), the judi6 cial council of the circuit may determine whether a cir7 cumstance specified in subparagraph (A) or (B) of such

8 paragraph exists.

9 ‘‘(D) If the judicial council finds that either of such

10 circumstances exists, the judicial council may provide for

11 the completion of the appeals then pending before such serv12 ice and the orderly termination of such service.

13 ‘‘(3) Bankruptcy judges appointed under paragraph

14 (1) shall be appointed and may be reappointed under such

15 paragraph.’’, and

16 (4) by inserting after paragraph (4), as so redes17 ignated, the following:

18 ‘‘(5) An appeal to be heard under this subsection shall

19 be heard by a panel of 3 members of the bankruptcy appel20 late panel service, except that a member of such service may

21 not hear an appeal originating in the district for which

22 such member is appointed or designated under section 152

23 of this title.

24 ‘‘(6) Appeals may not be heard under this subsection

25 by a panel of the bankruptcy appellate panel service unless
11

•HR 5116 RH

1 the district judges for the district in which the appeals

2 occur, by majority vote, have authorized such service to hear

3 and determine appeals originating in such district.’’.

4 (d) APPEALS TO BE HEARD BY BANKRUPTCY APPEL5 LATE PANEL SERVICE.—Section 158 of title 28, United

6 States Code, is amended—

7 (1) in subsection (c) by striking ‘‘(c)’’ and in8 serting ‘‘(2)’’, and

9 (2) by inserting after subsection (b) the follow10 ing:

11 ‘‘(c)(1) Subject to subsection (b), each appeal under

12 subsection (a) shall be heard by a 3-judge panel of the bank13 ruptcy appellate panel service established under subsection

14 (b)(1) unless—

15 ‘‘(A) the appellant elects at the time of filing the

16 appeal; or

17 ‘‘(B) any other party elects, not later than 30

18 days after service of notice of the appeal;

19 to have such appeal heard by the district court.’’.

20 (e) RULES OF PROCEDURE AND EVIDENCE; METHOD OF

21 PRESCRIBING.—Section 2073 of title 28, United States

22 Code, is amended—

23 (1) in subsection (a)(2) by striking ‘‘section

24 2072’’ and inserting ‘‘sections 2072 and 2075’’, and
12

•HR 5116 RH

1 (2) in subsections (d) and (e) by inserting ‘‘or

2 2075’’ after ‘‘2072’’ each place it appears.

3 (f) EFFECTIVE DATE OF BANKRUPTCY RULES.—Sec4 tion 2075 of title 28, United States Code, is amended by

5 striking ‘‘ninety days’’ and inserting ‘‘180 days’’.

6 SEC. 105. PARTICIPATION BY BANKRUPTCY ADMINIS7 TRATOR AT MEETINGS OF CREDITORS AND

8 EQUITY SECURITY HOLDERS.

9 (a) PRESIDING OFFICER.—A bankruptcy adminis10 trator appointed under section 302(d)(3)(I) of the Bank11 ruptcy Judges, United States Trustees, and Family Farmer

12 Bankruptcy Act of 1986 (28 U.S.C. 581 note; Public Law

13 99–554; 100 Stat. 3123), as amended by section 317(a) of

14 the Federal Courts Study Committee Implementation Act

15 of 1990 (Public Law 101–650; 104 Stat. 5115), or the bank16 ruptcy administrator’s designee may preside at the meeting

17 of creditors convened under section 341(a) of title 11, Unit18 ed States Code. The bankruptcy administrator or the bank19 ruptcy administrator’s designee may preside at any meet20 ing of equity security holders convened under section 341(b)

21 of title 11, United States Code.

22 (b) EXAMINATION OF THE DEBTOR.—The bankruptcy

23 administrator or the bankruptcy administrator’s designee

24 may examine the debtor at the meeting of creditors and may
13

•HR 5116 RH

1 administer the oath required under section 343 of title 11,

2 United States Code.

3 SEC. 106. DEFINITION RELATING TO ELIGIBILITY TO SERVE

4 ON CHAPTER 11 COMMITTEES.

5 Section 101(41) of title 11, United States Code, is

6 amended to read as follows:

7 ‘‘(41) ‘person’ includes individual, partnership,

8 and corporation, but does not include governmental

9 unit, except that a governmental unit that—

10 ‘‘(A) acquires an asset from a person—

11 ‘‘(i) as a result of the operation of a

12 loan guarantee agreement; or

13 ‘‘(ii) as receiver or liquidating agent of

14 a person;

15 ‘‘(B) is a guarantor of a pension benefit

16 payable by or on behalf of the debtor or an affili17 ate of the debtor; or

18 ‘‘(C) is the legal or beneficial owner of an

19 asset of—

20 ‘‘(i) an employee pension benefit plan

21 that is a governmental plan, as defined in

22 section 414(d) of the Internal Revenue Code

23 of 1986; or
14

•HR 5116 RH

1 ‘‘(ii) an eligible deferred compensation

2 plan, as defined in section 457(b) of the In3 ternal Revenue Code of 1986;

4 shall be considered, for purposes of section 1102 of

5 this title, to be a person with respect to such asset or

6 such benefit;’’.

7 SEC. 107. INCREASED INCENTIVE COMPENSATION FOR

8 TRUSTEES.

9 Section 326(a) of title 11, United States Code, is

10 amended by striking ‘‘fifteen’’ and all that follows through

11 ‘‘$3,000’’ the last place it appears, and inserting the follow12 ing:

13 ‘‘25 percent on the first $5,000 or less, 10 percent on any

14 amount in excess of $5,000 but not in excess of $50,000,

15 5 percent on any amount in excess of $50,000 but not in

16 excess of $1,000,000, and reasonable compensation not to

17 exceed 3 percent of such moneys in excess of $1,000,000’’.

18 SEC. 108. DOLLAR ADJUSTMENTS.

19 (a) WHO MAY BE A DEBTOR UNDER CHAPTER 13.—

20 Section 109(e) of title 11, United States Code, is amended—

21 (1) by striking ‘‘$100,000’’ each place it appears

22 and inserting ‘‘$250,000’’, and

23 (2) by striking ‘‘$350,000’’ each place it appears

24 and inserting ‘‘$750,000’’.
15

•HR 5116 RH

1 (b) INVOLUNTARY CASES.—Section 303(b) of title 11,

2 United States Code, is amended—

3 (1) in paragraph (1) by striking ‘‘$5,000’’ and

4 inserting ‘‘$10,000’’, and

5 (2) in paragraph (2) by striking ‘‘$5,000’’ and

6 inserting ‘‘$10,000’’.

7 (c) PRIORITIES.—Section 507(a) of title 11, United

8 States Code, is amended—

9 (1) in paragraph (4)(B)(i) by striking ‘‘$2,000’’

10 and inserting ‘‘$4,000’’,

11 (2) in paragraph (5) by striking ‘‘$2,000’’ and

12 inserting ‘‘$4,000’’, and

13 (3) in paragraph (6) by striking ‘‘$900’’ and in14 serting ‘‘$1,800’’.

15 (d) EXEMPTIONS.—Section 522(d) of title 11, United

16 States Code, is amended—

17 (1) in paragraph (1) by striking ‘‘$7,500’’ and

18 inserting ‘‘$15,000’’,

19 (2) in paragraph (2) by striking ‘‘$1,200’’ and

20 inserting ‘‘$2,400’’,

21 (3) in paragraph (3)—

22 (A) by striking ‘‘$200’’ and inserting

23 ‘‘$400’’, and

24 (B) by striking ‘‘$4,000’’ and inserting

25 ‘‘$8,000’’,
16

•HR 5116 RH

1 (4) in paragraph (4) by striking ‘‘$500’’ and in2 serting ‘‘$1,000’’,

3 (5) in paragraph (5)—

4 (A) by striking ‘‘$400’’ and inserting

5 ‘‘$800’’, and

6 (B) by striking ‘‘$3,750’’ and inserting

7 ‘‘$7,500’’,

8 (6) in paragraph (6) by striking ‘‘$750’’ and in9 serting ‘‘$1,500’’,

10 (7) in paragraph (8) by striking ‘‘$4,000’’ and

11 inserting ‘‘$8,000’’, and

12 (8) in paragraph (11)(D) by striking ‘‘$7,500’’

13 and inserting ‘‘$15,000’’.

14 (e) FUTURE ADJUSTMENTS.—Section 104 of title 11,

15 United States Code, is amended—

16 (1) by inserting ‘‘(a)’’ before ‘‘The’’, and

17 (2) by adding at the end the following:

18 ‘‘(b)(1) On April 1, 1998, and at each 3-year interval

19 ending on April 1 thereafter, each dollar amount in effect

20 under sections 109(e), 303(b), 507(a), 522(d), and

21 523(a)(2)(C) immediately before such April 1 shall be ad22 justed—

23 ‘‘(A) to reflect the change in the Consumer Price

24 Index for All Urban Consumers, published by the De25 partment of Labor, for the most recent 3-year period
17

•HR 5116 RH

1 ending immediately before January 1 preceding such

2 April 1, and

3 ‘‘(B) to round to the nearest $25 the dollar

4 amount that represents such change.

5 ‘‘(2) Not later than March 1, 1998, and at each 3-year

6 interval ending on March 1 thereafter, the Judicial Con7 ference of the United States shall publish in the Federal

8 Register the dollar amounts that will become effective on

9 such April 1 under sections 109(e), 303(b), 507(a), 522(d),

10 and 523(a)(2)(C) of this title.

11 ‘‘(3) Adjustments made in accordance with paragraph

12 (1) shall not apply with respect to cases commenced before

13 the date of such adjustments.’’.

14 SEC. 109. PREMERGER NOTIFICATION.

15 Subparagraphs (A) and (B) of section 363(b)(2) of

16 title 11, United States Code, are amended to read as follows:

17 ‘‘(A) notwithstanding subsection (a) of such

18 section, the notification required by such sub19 section to be given by the debtor shall be given

20 by the trustee; and

21 ‘‘(B) notwithstanding subsection (b) of such

22 section, the required waiting period shall end on

23 the 15th day after the date of the receipt, by the

24 Federal Trade Commission and the Assistant At25 torney General in charge of the Antitrust Divi-
18

•HR 5116 RH

1 sion of the Department of Justice, of the notifica2 tion required under such subsection (a), unless

3 such waiting period is extended—

4 ‘‘(i) pursuant to subsection (e)(2) of

5 such section, in the same manner as such

6 subsection (e)(2) applies to a cash tender

7 offer;

8 ‘‘(ii) pursuant to subsection (g)(2) of

9 such section; or

10 ‘‘(iii) by the court after notice and a

11 hearing.’’.

12 SEC. 110. ALLOWANCE OF CREDITOR COMMITTEE EX13 PENSES.

14 Section 503(b)(3) of title 11, United States Code, is

15 amended—

16 (1) in subparagraph (D) by striking ‘‘or’’ at the

17 end,

18 (2) in subparagraph (E) by inserting ‘‘or’’ at the

19 end, and

20 (3) by adding at the end the following:

21 ‘‘(F) a member of a committee appointed

22 under section 1102 of this title, if such expenses

23 are incurred in the performance of the duties of

24 such committee;’’.
19

•HR 5116 RH

1 SEC. 111. SUPPLEMENTAL INJUNCTIONS; SETTLEMENT OF

2 CLAIMS AND DEMANDS FOR PAYMENT.

3 (a) SUPPLEMENTAL INJUNCTIONS.—Section 524 of

4 title 11, United States Code, is amended by adding at the

5 end the following:

6 ‘‘(g)(1)(A) After notice and hearing, a court that enters

7 an order confirming a plan of reorganization under chapter

8 11 may issue an injunction to supplement the injunctive

9 effect of a discharge under this section.

10 ‘‘(B) An injunction may be issued under subparagraph

11 (A) to enjoin persons and governmental units from taking

12 legal action for the purpose of directly or indirectly collect13 ing, recovering, or receiving payment or recovery of, on, or

14 with respect to any claim or demand that, under a plan

15 of reorganization, is to be paid in whole or in part by a

16 trust described in paragraph (2)(B)(i), except such legal ac17 tions as are expressly allowed by the injunction, the con18 firmation order, or the plan of reorganization.

19 ‘‘(2)(A) If the requirements of subparagraph (B) are

20 met at any time, then, after entry of an injunction under

21 paragraph (1), any proceeding that involves the validity,

22 application, construction, or modification of the injunction

23 or of this subsection with respect to the injunction may be

24 commenced only in the district court in which the injunc25 tion was entered, and such court shall have exclusive juris-
20

•HR 5116 RH

1 diction over any such proceeding without regard to the

2 amount in controversy.

3 ‘‘(B) The requirements of this subparagraph are

4 that—

5 ‘‘(i) the injunction is to be implemented in con6 nection with a trust that, pursuant to the plan of re7 organization—

8 ‘‘(I) is to assume the liabilities of a debtor

9 which at the time of entry of the order for relief

10 has been named as a defendant in personal in11 jury, wrongful death, or property-damage actions

12 seeking recovery for damages allegedly caused by

13 the presence of, or exposure to, asbestos or asbes14 tos-containing products;

15 ‘‘(II) is to be funded in whole or in part by

16 the securities of 1 or more debtors involved in the

17 plan of reorganization and by the obligation of

18 such debtor or debtors to make future payments,

19 including dividends;

20 ‘‘(III) is to own, or by the exercise of rights

21 granted under the plan could own, a majority of

22 the voting shares of—

23 ‘‘(aa) each such debtor;

24 ‘‘(bb) the parent corporation of each

25 such debtor; or
21

•HR 5116 RH

1 ‘‘(cc) a subsidiary of each such debtor

2 that is also a debtor; and

3 ‘‘(IV) is to use its assets or income to pay

4 claims and demands; and

5 ‘‘(ii) the court, at any time pursuant to its au6 thority under the plan, over the trust, or otherwise,

7 determines that—

8 ‘‘(I) the debtor may be subject to substantial

9 future demands for payment arising out of the

10 same or similar conduct or events that gave rise

11 to the claims that are addressed by the injunc12 tion;

13 ‘‘(II) the actual amounts, numbers, and

14 timing of such future demands cannot be deter15 mined;

16 ‘‘(III) pursuit of such demands outside the

17 procedures prescribed by the plan may threaten

18 the plan’s purpose to deal equitably with claims

19 and future demands;

20 ‘‘(IV) as part of the process of seeking ap21 proval of the plan of reorganization—

22 ‘‘(aa) the terms of the injunction pro23 posed to be issued under paragraph (1)(A),

24 including any provisions barring actions

25 against third parties pursuant to para-
22

•HR 5116 RH

1 graph (4)(A), shall be set out in the plan of

2 reorganization and in any disclosure state3 ment supporting the plan; and

4 ‘‘(bb) a separate class or classes of the

5 claimants whose claims are to be addressed

6 by a trust described in clause (i) is estab7 lished and votes, by at least 75 percent of

8 those voting, in favor of the plan; and

9 ‘‘(V) pursuant to court orders or otherwise,

10 the trust will operate through mechanisms such

11 as structured, periodic or supplemental pay12 ments, pro rata distributions, matrices, or peri13 odic review of estimates of the numbers and val14 ues of present claims and future demands or

15 other comparable alternates, that provide reason16 able assurance that the trust will value, and be

17 in a financial position to pay, present claims

18 and future demands that involve similar claims

19 in substantially the same manner, except that

20 with respect to a trust in existence on the date

21 of the enactment of the Bankruptcy Amendments

22 of 1994 that is subject to a court order staying

23 it from settling or paying further claims—
23

•HR 5116 RH

1 ‘‘(aa) the requirements of this

2 subclause shall apply as of the date such

3 stay is lifted or otherwise dissolved; and

4 ‘‘(bb) such a trust that meets the re5 quirements of the subclause as of the date

6 such stay is lifted or dissolved, shall be

7 treated for all legal purposes as being in

8 compliance with this subsection from the

9 date of the enactment of such Act.

10 ‘‘(3)(A) If the requirements of paragraph (2)(B) are

11 met and the order approving the plan of reorganization was

12 issued or affirmed by the district court that has jurisdiction

13 over the reorganization case, then after the time for appeal

14 of the order that issues or affirms the plan of reorganiza15 tion—

16 ‘‘(i) the injunction shall be valid and enforceable

17 and may not be revoked or modified by any court ex18 cept through appeal in accordance with paragraph

19 (6);

20 ‘‘(ii) no entity that pursuant to the plan of reor21 ganization or thereafter becomes a direct or indirect

22 transferee of, or successor to any assets of, a debtor or

23 trust that is the subject of the injunction shall be lia24 ble with respect to any claim or demand made
24

•HR 5116 RH

1 against it by reason of its becoming such a transferee

2 or successor; and

3 ‘‘(iii) no entity that pursuant to the plan of re4 organization or thereafter makes a loan to such a

5 debtor or trust or to such a successor or transferee

6 shall, by reason of making the loan, be liable with re7 spect to any claim or demand made against it, nor

8 shall any pledge of assets made in connection with

9 such a loan be upset or impaired for that reason;

10 ‘‘(B) Subparagraph (A) shall not be construed to—

11 ‘‘(i) imply that an entity described in subpara12 graph (A) (ii) or (iii) would, if this paragraph were

13 not applicable, have liability by reason of any of the

14 acts described in subparagraph (A);

15 ‘‘(ii) relieve any such entity of the duty to com16 ply with, or of liability under, any Federal or State

17 law regarding the making of a fraudulent conveyance

18 in a transaction described in subparagraph (A) (ii)

19 or (iii); or

20 ‘‘(iii) relieve a debtor of the debtor’s obligation to

21 comply with the terms of the plan of reorganization

22 or affect the power of the court to exercise its author23 ity under sections 1141 and 1142 to compel the debtor

24 to do so.
25

•HR 5116 RH

1 ‘‘(4)(A)(i) Subject to subparagraph (B), an injunction

2 under paragraph (1) shall be valid and enforceable against

3 all persons and governmental units that it addresses.

4 ‘‘(ii) Notwithstanding the provisions of section 524(e),

5 such an injunction may bar any action directed against

6 a third party who is identifiable from the terms of the in7 junction (by name or as part of an identifiable group) and

8 is alleged to be directly or indirectly liable for the conduct

9 of, claims against, or demands on the debtor by reason of—

10 ‘‘(I) the party’s ownership of a financial interest

11 in the debtor, a past or present affiliate of the debtor,

12 or a predecessor in interest of the debtor;

13 ‘‘(II) the party’s involvement in the management

14 of the debtor or a predecessor in interest of the debtor,

15 or service as an officer, director or employee of the

16 debtor or a related party;

17 ‘‘(III) the party’s provision of insurance to the

18 debtor or a related party; or

19 ‘‘(IV) the party’s involvement in a transaction

20 affecting the corporate structure or financial condi21 tion of the debtor or a related party, including, but

22 not limited to—

23 ‘‘(aa) involvement in providing financing

24 (debt or equity), or advice to a person or entity

25 involved in such a transaction; or
26

•HR 5116 RH

1 ‘‘(bb) acquiring or selling a financial inter2 est in an entity as part of such a transaction.

3 ‘‘(iii) As used in this subparagraph, the term ‘related

4 party’ means—

5 ‘‘(I) a past or present affiliate of the debtor;

6 ‘‘(II) a predecessor in interest of the debtor; or

7 ‘‘(III) any person or entity that owned a finan8 cial interest in—

9 ‘‘(aa) the debtor;

10 ‘‘(bb) a past or present affiliate of the debt11 or; or

12 ‘‘(cc) a predecessor interest in the debtor.

13 ‘‘(B) With respect to a demand (including a demand

14 directed against a third party described in subparagraph

15 (A)(ii)) that is made subsequent to the confirmation of a

16 plan against any person or entity that is the subject of an

17 injunction issued under paragraph (1), the injunction shall

18 be valid and enforceable if, as part of the proceedings lead19 ing to its issuance, the court appointed a legal representa20 tive for the purpose of protecting the rights of persons that

21 might subsequently assert such a demand.

22 ‘‘(5) In this subsection, the term ‘demand’ means a de23 mand for payment, present or future, that—
27

•HR 5116 RH

1 ‘‘(A) was not a claim during the proceedings

2 leading to the confirmation of a plan of reorganiza3 tion;

4 ‘‘(B) arises out of the same or similar conduct

5 or events that gave rise to the claims addressed by the

6 injunction issued under paragraph (1); and

7 ‘‘(C) pursuant to the plan, is to be paid by a

8 trust described in paragraph (2)(B)(i).

9 ‘‘(6) Paragraph (3)(A)(i) does not bar an action taken

10 by or at the direction of an appellate court on appeal of

11 an injunction issued under paragraph (1) or of the order

12 of confirmation that relates to the injunction.

13 ‘‘(7) This subsection applies to any injunction of the

14 nature described in paragraph (1)(B) in effect, and any

15 trust of the nature described in paragraph (2)(B) in exist16 ence, on or after the date of enactment of this subsection.

17 ‘‘(8) This subsection does not affect the operation of

18 section 1144 or the power of the district court to refer a

19 proceeding under section 157 of title 28 or any reference

20 of a proceeding made prior to the date of enactment of this

21 subsection.

22 ‘‘(h) Nothing in subsection (g) shall affect the court’s

23 authority to issue an injunction (including an injunction

24 that requires claims and demands to be presented for pay25 ment solely to a trust or any other type of court approved
28

•HR 5116 RH

1 settlement vehicle) which is entered pursuant to an order

2 approving a plan of reorganization.’’.

3 (b) SETTLEMENT OF CLAIMS AND DEMANDS FOR PAY4 MENT.—Section 105 of title 11, United States Code, as

5 amended by section 104, is amended by adding at the end

6 the following:

7 ‘‘(e)(1) A court may issue an injunction that requires

8 claims and demands to be presented for payment solely to

9 a trust or other vehicle that is established for the purpose

10 of settling such claims and demands and is approved by

11 the court and entered into pursuant to an order approving

12 a plan of reorganization.

13 ‘‘(2) This subsection applies to any injunction of

14 the nature described in paragraph (1) in effect, and

15 any trust of the nature described in such paragraph

16 in existence, on or after the date of the enactment of

17 the Bankruptcy Amendments of 1994.’’.

18 SEC. 112. AUTHORITY OF BANKRUPTCY JUDGES TO CON19 DUCT JURY TRIALS IN CIVIL PROCEEDINGS.

20 Section 157(c) of title 28, United States Code, is

21 amended by adding at the end the following:

22 ‘‘(3) If the right to a jury trial applies in a proceeding

23 that may be heard under paragraph (1) or (2) of this sub24 section by a bankruptcy judge, the bankruptcy judge may

25 conduct the jury trial if specially designated to exercise such
29

•HR 5116 RH

1 jurisdiction by the district and with the consent of all the

2 parties.’’.

3 SEC. 113. SOVEREIGN IMMUNITY.

4 Section 106 of title 11, United States Code, is amended

5 to read as follows:

6 ‘‘§ 106. Waiver of sovereign immunity

7 ‘‘(a) Notwithstanding an assertion of sovereign immu8 nity, except as provided in subsection (d)—

9 ‘‘(1) all provisions of this title shall apply to

10 governmental units;

11 ‘‘(2) the court may hear and determine any issue

12 arising with respect to the application of such provi13 sions to governmental units; and

14 ‘‘(3) the court may issue and enforce any order,

15 process, or judgment against a governmental unit, in16 cluding an order or judgment awarding a money re17 covery, to the same extent as against any other entity.

18 ‘‘(b) A governmental unit is deemed to have waived

19 sovereign immunity with respect to a claim against such

20 governmental unit that is property of the estate and that

21 arose out of the same transaction or occurrence out of which

22 the claim of such governmental unit arose.

23 ‘‘(c) Notwithstanding any assertion of sovereign im24 munity by a governmental unit, there shall be offset against

25 a claim or interest of a governmental unit any claim
30

•HR 5116 RH

1 against such governmental unit that is property of the es2 tate.

3 ‘‘(d) Except as provided in subsections (b) and (c) or

4 in applicable nonbankruptcy law, a governmental unit may

5 assert sovereign immunity with respect to a claim of the

6 estate against such governmental unit only if such claim—

7 ‘‘(1) is not a tax claim or related to a tax claim

8 subject to determination under section 505; and

9 ‘‘(2)(A) is a claim of the debtor against such gov10 ernmental unit that arose before the commencement of

11 the case and became property of the estate only under

12 paragraph (1) or (2) of section 541(a); or

13 ‘‘(B) arises under nonbankruptcy law after the

14 commencement of the case from the operation of the

15 business of the debtor.’’.

16 SEC. 114. SERVICE OF PROCESS IN BANKRUPTCY PROCEED17 INGS ON AN INSURED DEPOSITORY INSTITU18 TION.

19 Rule 7004 of the Federal Rules of Bankruptcy Proce20 dure is amended—

21 (1) in subsection (b) by striking ‘‘In addition’’

22 and inserting ‘‘Except as provided in subdivision (h),

23 in addition’’; and

24 (2) by adding at the end the following:
31

•HR 5116 RH

1 ‘‘(h) SERVICE OF PROCESS ON AN INSURED DEPOSI2 TORY INSTITUTION.—Service on an insured depository in3 stitution (as defined in section 3 of the Federal Deposit In4 surance Act (12 U.S.C. 1813)) in a contested matter or ad5 versary proceeding shall be made by certified mail ad6 dressed to an officer of the institution unless—

7 ‘‘(1) the institution has appeared by its attorney,

8 in which case the attorney shall be served by first

9 class mail;

10 ‘‘(2) the court orders otherwise after service upon

11 the institution by certified mail of notice of an appli12 cation to permit service on the institution by first

13 class mail sent to an officer of the institution des14 ignated by the institution; or

15 ‘‘(3) the institution has waived in writing its en16 titlement to service by certified mail by designating

17 an officer to receive service.’’.

18 SEC. 115. MEETINGS OF CREDITORS AND EQUITY SECURITY

19 HOLDERS.

20 Section 341 of title 11, United States Code, is amended

21 by adding at the end the following:

22 ‘‘(d) Prior to the conclusion of the meeting of creditors

23 or equity security holders, the United States trustee shall

24 orally examine the debtor to ensure that the debtor is aware

25 of—
32

•HR 5116 RH

1 ‘‘(1) the potential consequences of seeking a dis2 charge in bankruptcy, including the effects on credit

3 history;

4 ‘‘(2) the debtor’s ability to file a petition under

5 a different chapter of this title;

6 ‘‘(3) the effect of receiving a discharge of debts

7 under this title; and

8 ‘‘(4) the effect of reaffirming a debt, including

9 the debtor’s knowledge of the provisions of section

10 524(d).’’.

11 SEC. 116. TAX ASSESSMENT.

12 Section 362(b)(9) of title 11, United States Code, is

13 amended to read as follows:

14 ‘‘(9) under subsection (a), of—

15 ‘‘(A) an audit by a governmental unit to

16 determine tax liability;

17 ‘‘(B) the issuance to the debtor by a govern18 mental unit of a notice of tax deficiency;

19 ‘‘(C) a demand for tax returns; or

20 ‘‘(D) the making of an assessment for any

21 tax and issuance of a notice and demand for

22 payment of such an assessment (but any tax lien

23 that would otherwise attach to property of the es24 tate by reason of such an assessment shall not

25 take effect unless such tax is a debt of the debtor
33

•HR 5116 RH

1 that will not be discharged in the case and such

2 property or its proceeds are transferred out of

3 the estate to, or otherwise revested in, the debt4 or).’’.

5 SEC. 117. ADDITIONAL TRUSTEE COMPENSATION.

6 Section 330(b) of title 11, United States Code, is

7 amended—

8 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and

9 (2) by adding at the end thereof the following:

10 ‘‘(2) The Judicial Conference of the United States shall

11 prescribe additional fees of the same kind as prescribed

12 under section 1914(b) of title 28, to pay $15 to the trustee

13 serving in such case after such trustee’s services are ren14 dered. Such $15 shall be paid in addition to the amount

15 paid under paragraph (1).’’.

16 TITLE II—COMMERCIAL

17 BANKRUPTCY ISSUES

18 SEC. 201. AIRCRAFT EQUIPMENT AND VESSELS; ROLLING

19 STOCK EQUIPMENT.

20 (a) AMENDMENT OF SECTION 1110.—Section 1110 of

21 title 11, United States Code, is amended to read as follows:

22 ‘‘§ 1110. Aircraft equipment and vessels

23 ‘‘(a)(1) The right of a secured party with a security

24 interest in equipment described in paragraph (2) or of a

25 lessor or conditional vendor of such equipment to take pos-
34

•HR 5116 RH

1 session of such equipment in compliance with a security

2 agreement, lease, or conditional sale contract is not affected

3 by section 362, 363, or 1129 or by any power of the court

4 to enjoin the taking of possession unless—

5 ‘‘(A) before the date that is 60 days after the

6 date of the order for relief under this chapter, the

7 trustee, subject to the court’s approval, agrees to per8 form all obligations of the debtor that become due on

9 or after the date of the order under such security

10 agreement, lease, or conditional sale contract; and

11 ‘‘(B) any default, other than a default of a kind

12 specified in section 365(b)(2), under such security

13 agreement, lease, or conditional sale contract—

14 ‘‘(i) that occurs before the date of the order

15 is cured before the expiration of such 60-day pe16 riod; and

17 ‘‘(ii) that occurs after the date of the order

18 is cured before the later of—

19 ‘‘(I) the date that is 30 days after the

20 date of the default; or

21 ‘‘(II) the expiration of such 60-day pe22 riod.

23 ‘‘(2) Equipment is described in this paragraph if it

24 is—
35

•HR 5116 RH

1 ‘‘(A) an aircraft, aircraft engine, propeller, ap2 pliance, or spare part (as defined in section 40102 of

3 title 49) that is subject to a security interest granted

4 by, leased to, or conditionally sold to a debtor that is

5 a citizen of the United States (as defined in 40102 of

6 title 49) holding an air carrier operating certificate

7 issued by the Secretary of Transportation pursuant to

8 chapter 447 of title 49 for aircraft capable of carrying

9 10 or more individuals or 6,000 pounds or more of

10 cargo; or

11 ‘‘(B) a documented vessel (as defined in section

12 30101(1) of title 46) that is subject to a security in13 terest granted by, leased to, or conditionally sold to

14 a debtor that is a water carrier that holds a certifi15 cate of public convenience and necessity or permit is16 sued by the Interstate Commerce Commission.

17 ‘‘(3) Paragraph (1) applies to a secured party, lessor,

18 or conditional vendor acting in its own behalf or acting

19 as trustee or otherwise in behalf of another party.

20 ‘‘(b) The trustee and the secured party, lessor, or condi21 tional vendor whose right to take possession is protected

22 under subsection (a) may agree, subject to the court’s ap23 proval, to extend the 60-day period specified in subsection

24 (a)(1).
36

•HR 5116 RH

1 ‘‘(c) With respect to equipment first placed in service

2 on or prior to the date of enactment of this subsection, for

3 purposes of this section—

4 ‘‘(1) the term ‘lease’ includes any written agree5 ment with respect to which the lessor and the debtor,

6 as lessee, have expressed in the agreement or in a sub7 stantially contemporaneous writing that the agree8 ment is to be treated as a lease for Federal income

9 tax purposes; and

10 ‘‘(2) the term ‘security interest’ means a pur11 chase-money equipment security interest.’’.

12 (b) AMENDMENT OF SECTION 1168.—Section 1168 of

13 title 11, United States Code, is amended to read as follows:

14 ‘‘§ 1168. Rolling stock equipment

15 ‘‘(a)(1) The right of a secured party with a security

16 interest in or of a lessor or conditional vendor of equipment

17 described in paragraph (2) to take possession of such equip18 ment in compliance with an equipment security agreement,

19 lease, or conditional sale contract is not affected by section

20 362, 363, or 1129 or by any power of the court to enjoin

21 the taking of possession, unless—

22 ‘‘(A) before the date that is 60 days after the

23 date of commencement of a case under this chapter,

24 the trustee, subject to the court’s approval, agrees to

25 perform all obligations of the debtor that become due
37

•HR 5116 RH

1 on or after the date of commencement of the case

2 under such security agreement, lease, or conditional

3 sale contract; and

4 ‘‘(B) any default, other than a default of a kind

5 described in section 365(b)(2), under such security

6 agreement, lease, or conditional sale contract—

7 ‘‘(i) that occurs before the date of com8 mencement of the case and is an event of default

9 therewith is cured before the expiration of such

10 60-day period; and

11 ‘‘(ii) that occurs or becomes an event of de12 fault after the date of commencement of the case

13 is cured before the later of—

14 ‘‘(I) the date that is 30 days after the

15 date of the default or event of default; or

16 ‘‘(II) the expiration of such 60-day pe17 riod.

18 ‘‘(2) Equipment is described in this paragraph if it

19 is rolling stock equipment or accessories used on such equip20 ment, including superstructures and racks, that is subject

21 to a security interest granted by, leased to, or conditionally

22 sold to the debtor.

23 ‘‘(3) Paragraph (1) applies to a secured party, lessor,

24 or conditional vendor acting in its own behalf or acting

25 as trustee or otherwise in behalf of another party.
38

•HR 5116 RH

1 ‘‘(b) The trustee and the secured party, lessor, or condi2 tional vendor whose right to take possession is protected

3 under subsection (a) may agree, subject to the court’s ap4 proval, to extend the 60-day period specified in subsection

5 (a)(1).

6 ‘‘(c) With respect to equipment first placed in service

7 on or prior to the date of enactment of this subsection, for

8 purposes of this section—

9 ‘‘(1) the term ‘lease’ includes any written agree10 ment with respect to which the lessor and the debtor,

11 as lessee, have expressed in the agreement or in a sub12 stantially contemporaneous writing that the agree13 ment is to be treated as a lease for Federal income

14 tax purposes; and

15 ‘‘(2) the term ‘security interest’ means a pur16 chase-money equipment security interest.

17 ‘‘(d) With respect to equipment first placed in service

18 after the date of enactment of this subsection, for purposes

19 of this section, the term ‘rolling stock equipment’ includes

20 rolling stock equipment that is substantially rebuilt and ac21 cessories used on such equipment.’’.

22 SEC. 202. LIMITATION ON LIABILITY OF NON-INSIDER

23 TRANSFEREE FOR AVOIDED TRANSFER.

24 Section 550 of title 11, United States Code, is amend25 ed—
39

•HR 5116 RH

1 (1) by redesignating subsections (c), (d), and (e)

2 as subsections (d), (e), and (f), respectively, and

3 (2) by inserting after subsection (b) the follow4 ing:

5 ‘‘(c) If a transfer made between 90 days and one year

6 before the filing of the petition—

7 ‘‘(1) is avoided under section 547(b) of this title;

8 and

9 ‘‘(2) was made for the benefit of a creditor that

10 at the time of such transfer was an insider;

11 the trustee may not recover under subsection (a) from a

12 transferee that is not an insider.’’.

13 SEC. 203. PERFECTION OF PURCHASE-MONEY SECURITY IN14 TEREST.

15 Section 547 of title 11, United States Code, is amend16 ed—

17 (1) in subsection (c)(3)(B) by striking ‘‘10’’ and

18 inserting ‘‘20’’, and

19 (2) in subsection (e)(2)(A) by inserting ‘‘, except

20 as provided in subsection (c)(3)(B)’’ before the semi21 colon at the end.

22 SEC. 204. CONTINUED PERFECTION.

23 (a) AUTOMATIC STAY.—Section 362(b)(3) of title 11,

24 United States Code, is amended by inserting ‘‘, or to main25 tain or continue the perfection of,’’ after ‘‘to perfect’’.
40

•HR 5116 RH

1 (b) LIMITATIONS ON AVOIDING POWERS.—Section

2 546(b) of title 11, United States Code, is amended to read

3 as follows:

4 ‘‘(b)(1) The rights and powers of a trustee under sec5 tions 544, 545, and 549 of this title are subject to any gen6 erally applicable law that—

7 ‘‘(A) permits perfection of an interest in prop8 erty to be effective against an entity that acquires

9 rights in such property before the date of perfection;

10 or

11 ‘‘(B) provides for the maintenance or continu12 ation of perfection of an interest in property to be ef13 fective against an entity that acquires rights in such

14 property before the date on which action is taken to

15 effect such maintenance or continuation.

16 ‘‘(2) If—

17 ‘‘(A) a law described in paragraph (1) requires

18 seizure of such property or commencement of an ac19 tion to accomplish such perfection, or maintenance or

20 continuation of perfection of an interest in property;

21 and

22 ‘‘(B) such property has not been seized or such

23 an action has not been commenced before the date of

24 the filing of the petition;
41

•HR 5116 RH

1 such interest in such property shall be perfected, or perfec2 tion of such interest shall be maintained or continued, by

3 giving notice within the time fixed by such law for such

4 seizure or such commencement.’’.

5 SEC. 205. REJECTION OF UNEXPIRED LEASES OF REAL

6 PROPERTY OR TIMESHARE INTERESTS.

7 (a) AMENDMENT TO SECTION 365.—Section 365(h) of

8 title 11, United States Code, is amended to read as follows:

9 ‘‘(h)(1)(A) If the trustee rejects an unexpired lease of

10 real property under which the debtor is the lessor and—

11 ‘‘(i) if the rejection by the trustee amounts to

12 such a breach as would entitle the lessee to treat such

13 lease as terminated by virtue of its terms, applicable

14 nonbankruptcy law, or any agreement made by the

15 lessee, then the lessee under such lease may treat such

16 lease as terminated by the rejection; or

17 ‘‘(ii) if the term of such lease has commenced, the

18 lessee may retain its rights under such lease (includ19 ing rights such as those relating to the amount and

20 timing of payment of rent and other amounts payable

21 by the lessee and any right of use, possession, quiet

22 enjoyment, subletting, assignment, or hypothecation)

23 that are in or appurtenant to the real property for

24 the balance of the term of such lease and for any re25 newal or extension of such rights to the extent that
42

•HR 5116 RH

1 such rights are enforceable under applicable

2 nonbankruptcy law.

3 ‘‘(B) If the lessee retains its rights under subparagraph

4 (A)(ii), the lessee may offset against the rent reserved under

5 such lease for the balance of the term after the date of the

6 rejection of such lease and for the term of any renewal or

7 extension of such lease, the value of any damage caused by

8 the nonperformance after the date of such rejection, of any

9 obligation of the debtor under such lease, but the lessee shall

10 not have any other right against the estate or the debtor

11 on account of any damage occurring after such date caused

12 by such nonperformance.

13 ‘‘(C) The rejection of a lease of real property in a shop14 ping center with respect to which the lessee elects to retain

15 its rights under subparagraph (A)(ii) does not affect the

16 enforceability under applicable nonbankruptcy law of any

17 provision in the lease pertaining to radius, location, use,

18 exclusivity, or tenant mix or balance.

19 ‘‘(D) In this paragraph, ‘lessee’ includes any successor,

20 assign, or mortgagee permitted under the terms of such

21 lease.

22 ‘‘(2)(A) If the trustee rejects a timeshare interest under

23 a timeshare plan under which the debtor is the timeshare

24 interest seller and—
43

•HR 5116 RH

1 ‘‘(i) if the rejection amounts to such a breach as

2 would entitle the timeshare interest purchaser to treat

3 the timeshare plan as terminated under its terms, ap4 plicable nonbankruptcy law, or any agreement made

5 by timeshare interest purchaser, the timeshare interest

6 purchaser under the timeshare plan may treat the

7 timeshare plan as terminated by such rejection; or

8 ‘‘(ii) if the term of such timeshare interest has

9 commenced, then the timeshare interest purchaser

10 may retain its rights in such timeshare interest for

11 the balance of such term and for any term of renewal

12 or extension of such timeshare interest to the extent

13 that such rights are enforceable under applicable

14 nonbankruptcy law.

15 ‘‘(B) If the timeshare interest purchaser retains its

16 rights under subparagraph (A), such timeshare interest

17 purchaser may offset against the moneys due for such

18 timeshare interest for the balance of the term after the date

19 of the rejection of such timeshare interest, and the term of

20 any renewal or extension of such timeshare interest, the

21 value of any damage caused by the nonperformance after

22 the date of such rejection, of any obligation of the debtor

23 under such timeshare plan, but the timeshare interest pur24 chaser shall not have any right against the estate or the
44

•HR 5116 RH

1 debtor on account of any damage occurring after such date

2 caused by such nonperformance.’’.

3 (b) TECHNICAL AMENDMENT.—Section 553(b)(1) of

4 title 11, United States Code, is amended by striking

5 ‘‘365(h)(2)’’ and inserting ‘‘365(h)’’.

6 SEC. 206. CONTENTS OF PLAN.

7 Section 1123(b) of title 11, United States Code, is

8 amended—

9 (1) in paragraph (4) by striking ‘‘and’’ at the

10 end,

11 (2) by redesignating paragraph (5) as para12 graph (6), and

13 (3) by inserting after paragraph (4) the follow14 ing:

15 ‘‘(5) modify the rights of holders of secured

16 claims, other than a claim secured only by a security

17 interest in real property that is the debtor’s principal

18 residence, or of holders of unsecured claims, or leave

19 unaffected the rights of holder of any class of claims;

20 and’’.

21 SEC. 207. PRIORITY FOR INDEPENDENT SALES REPRESENT22 ATIVES.

23 Section 507(a)(3) of title 11, United States Code, is

24 amended to read as follows:
45

•HR 5116 RH

1 ‘‘(3) Third, allowed unsecured claims, but only

2 to the extent of $4,000 for each individual or corpora3 tion, as the case may be, earned within 90 days before

4 the date of the filing of the petition or the date of the

5 cessation of the debtor’s business, whichever occurs

6 first, for—

7 ‘‘(A) wages, salaries, or commissions, in8 cluding vacation, severance, and sick leave pay

9 earned by an individual; or

10 ‘‘(B) sales commissions earned by an indi11 vidual or by a corporation with only 1 employee,

12 acting as an independent contractor in the sale

13 of goods or services for the debtor in the ordinary

14 course of the debtor’s business if, and only if,

15 during the 12 months preceding that date, at

16 least 75 percent of the amount that the individ17 ual or corporation earned by acting as an inde18 pendent contractor in the sale of goods or serv19 ices was earned from the debtor;’’.
46

•HR 5116 RH

1 SEC. 208. EXCLUSION FROM THE ESTATE OF INTERESTS IN

2 LIQUID AND GASEOUS HYDROCARBONS

3 TRANSFERRED BY THE DEBTOR PURSUANT

4 TO PRODUCTION PAYMENT AGREEMENTS.

5 (a) DEFINITION.—Section 101 of title 11, United

6 States Code, is amended by inserting after paragraph (42)

7 the following:

8 ‘‘(42A) ‘production payment’ means a payment

9 (in cash or in kind) that is—

10 ‘‘(A) contingent on the production of a liq11 uid or gaseous hydrocarbon from particular real

12 property; and

13 ‘‘(B) attributable to part of a specified vol14 ume, or part of a specified value, of the liquid

15 or gaseous hydrocarbon produced from such

16 property, and determined without regard to pro17 duction costs;’’.

18 (b) PROPERTY OF THE ESTATE.—Section 541(b)(4) of

19 title 11, United States Code, is amended—

20 (1) in subparagraph (A) by striking ‘‘(A)’’ and

21 inserting ‘‘(A)(i)’’,

22 (2) in subparagraph (B)—

23 (A) by striking ‘‘(B)’’ and inserting ‘‘(ii),

24 (B) by striking ‘‘such interest’’ and insert25 ing ‘‘the interest referred to in clause (i)’’, and
47

•HR 5116 RH

1 (C) by striking the period at the end and

2 inserting ‘‘; or’’, and

3 (3) by adding at the end the following:

4 ‘‘(B)(i) the debtor has transferred or has

5 agreed to transfer such interest pursuant to a

6 written agreement to make production payments

7 to a person that does not participate in the pro8 duction of the liquid or gaseous hydrocarbon

9 with respect to which such payments are made;

10 and

11 ‘‘(ii) but for the operation of this para12 graph, the estate could include the interest re13 ferred to in clause (i) only by virtue of section

14 365 of this title;’’.

15 SEC. 209. SELLER’S RIGHT TO RECLAIM GOODS.

16 Section 546(c)(1) of title 11, United States Code, is

17 amended by striking ‘‘ten’’ and inserting ‘‘20’’.

18 SEC. 210. INVESTMENT OF MONEY OF THE ESTATE.

19 Section 345(b) of title 11, United States Code, is

20 amended—

21 (1) in paragraph (2) by striking the period at

22 the end and inserting a semicolon, and

23 (2) by adding ‘‘unless the court for cause orders

24 otherwise.’’ at the end of such subsection.
48

•HR 5116 RH

1 SEC. 211. ELECTION OF TRUSTEE UNDER CHAPTER 11.

2 (a) ELECTION AUTHORIZED.—Section 1104 of title 11

3 of the United States Code is amended—

4 (1) by redesignating subsections (b) and (c) as

5 subsections (c) and (d), respectively, and

6 (2) by inserting after subsection (a) the follow7 ing:

8 ‘‘(b) Except as provided in section 1163 of this title,

9 on the request of a party in interest made not later than

10 30 days after the court orders the appointment of a trustee

11 under subsection (a), the United States trustee shall convene

12 a meeting of creditors for the purpose of electing one disin13 terested person to serve as trustee in the case. The election

14 of a trustee shall be conducted in the manner provided in

15 subsections (a), (b), and (c) of section 702 of this title.’’.

16 (b) CONFORMING AMENDMENT.—Section 1106(b) of

17 title 11, United States Code, is amended by striking

18 ‘‘1104(c)’’ and inserting ‘‘1104(d)’’.

19 SEC. 212. RIGHTS OF PARTNERSHIP TRUSTEE AGAINST

20 GENERAL PARTNERS.

21 Section 723(a) of title 11, United States Code, is

22 amended by striking ‘‘for the full amount of the deficiency’’

23 and inserting ‘‘to the extent that under applicable

24 nonbankruptcy law such general partner is personally lia25 ble for the debts of the partnership’’.
49

•HR 5116 RH

1 SEC. 213. EXCLUSION FROM THE ESTATE OF CERTAIN AC2 COUNTS AND CHATTEL PAPER.

3 Section 541 of title 11, United States Code, as amend4 ed by section 208, is amended—

5 (1) in subsection (b) by inserting after para6 graph (4) the following:

7 ‘‘(5) any interest of the debtor in any account or

8 chattel paper to the extent that—

9 ‘‘(A) such interest was actually sold under

10 applicable nonbankruptcy law by the debtor be11 fore the date of commencement of the case, but

12 without taking into consideration whether the

13 purchaser filed a financing statement before such

14 date; and

15 ‘‘(B) but for the operation of this para16 graph, the estate could include such interest only

17 by virtue of section 542 of this title; or’’, and

18 (2) by adding at the end the following:

19 ‘‘(e) In this section—

20 ‘‘(1) ‘account’ means any right to payment for

21 goods sold or leased or for services rendered that is

22 not evidence by an instrument or chattel paper,

23 whether or not it has been earned by performance,

24 and includes all rights to payment earned or un25 earned under a charter or other contract involving the
50

•HR 5116 RH

1 use or hire of a vessel and all rights incident to such

2 charter or such contract; and

3 ‘‘(2) ‘chattel paper’ means—

4 ‘‘(A) a writing or writings that evidence

5 both a monetary obligation and a security inter6 est in or lease of specific goods (excluding a

7 charter or other contract involving the use or

8 hire of a vessel); or

9 ‘‘(B) if a transaction described in subpara10 graph (A) is evidenced both by such a security

11 agreement or a lease and by an instrument or a

12 series of instruments, the group of these writings

13 taken together.’’.

14 SEC. 214. IMPAIRMENT OF CLAIMS AND INTERESTS.

15 (a) OBJECTION TO CLAIMS FILED UNTIMELY.—Sec16 tion 502(b) of title 11, United States Code, is amended—

17 (1) in paragraph (7) by striking ‘‘or’’ at the end,

18 (2) in paragraph (8) by striking the period at

19 the end and inserting ‘‘; or’’, and

20 (3) by adding at the end the following:

21 ‘‘(9) proof of such claim is not timely filed, ex22 cept to the extent tardily filed as permitted under

23 paragraph (2) or (3) of section 726(a).’’.
51

•HR 5116 RH

1 (b) FILING OF REQUEST FOR ADMINISTRATIVE EX2 PENSES.—Section 503(a) of title 11, United States Code,

3 is amended—

4 (1) by inserting ‘‘timely’’ after ‘‘may’’, and

5 (2) by inserting ‘‘, or may tardily file such request

6 if permitted by the court for cause’’ before the period at

7 the end.

8 (c) IMPAIRMENT OF CLAIMS OR INTERESTS.—Section

9 1124 of title 11, United States Code, is amended—

10 (1) in paragraph (1) by inserting ‘‘or’’ at the

11 end,

12 (2) in paragraph (2) by striking ‘‘; or’’ at the

13 end and inserting a period, and

14 (3) by striking paragraph (3).

15 SEC. 215. PROTECTION OF SECURITY INTEREST IN POST-PE16 TITION RENTS.

17 (a) Postpetition Effect of Security Interest.—Section

18 552(b) of title 11, United States Code, is amended—

19 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’,

20 (2) by striking ‘‘rents,’’ each place it appears,

21 and

22 (2) by adding at the end the following:

23 ‘‘(2) Except as provided in sections 363, 506(c), 522,

24 544, 545, 547, and 548 of this title, and notwithstanding

25 section 546(b) of this title, if the debtor and an entity en-
52

•HR 5116 RH

1 tered into a security agreement before the commencement

2 of the case and if the security interest created by such secu3 rity agreement extends to property of the debtor acquired

4 before the commencement of the case and to rents of such

5 property, then such security interest extends to such rents

6 acquired by the estate after the commencement of the case

7 to the extent provided in such security agreement, except

8 to any extent that the court, after notice and a hearing and

9 based on the equities of the case, orders otherwise.’’.

10 (b) USE SALE, OR LEASE OF PROPERTY.—Section

11 363(a) of title 11, United States Code, is amended by insert12 ing: ‘‘and the net fees, charges, accounts or other payments

13 for the use or occupancy of rooms and other public facilities

14 in hotels, motels, or other lodging properties’’ after ‘‘prop15 erty’’.

16 SEC. 216. AMENDMENT TO DEFINITION OF SWAP AGREE17 MENT.

18 Subparagraph (A) of the first paragraph (55) of sec19 tion 101 of title 11, United States Code, is amended by in20 serting ‘‘spot foreign exchange agreement,’’ after ‘‘forward

21 foreign exchange agreement,’’.

22 SEC. 217. LIMITATION ON AVOIDING POWERS.

23 Section 546(a) of title 11, United States Code, is

24 amended—

25 (1) by striking ‘‘earlier’’ and inserting ‘‘later’’, and
53

•HR 5116 RH

1 (2) by amending paragraphs (1) and (2) to read as

2 follows:

3 ‘‘(1) 2 years after the entry of the order for relief;

4 or

5 ‘‘(2) 1 year after the appointment or election of

6 the first trustee under section 702, 1104, 1163, 1202,

7 or 1302 of this title if such appointment or such elec8 tion occurs before the expiration of the period speci9 fied in subparagraph (1).’’.

10 SEC. 218. SMALL BUSINESSES.

11 (a) DEFINITION.—Section 101 of title 11, United

12 States Code, is amended by inserting after paragraph (51)

13 the following:

14 ‘‘(51C) ‘small business’ means a person engaged

15 in commercial or business activities (but does not in16 clude a person whose primary activity is the business

17 of owning or operating real property and activities

18 incidental thereto) whose aggregate noncontingent liq19 uidated secured and unsecured debts as of the date of

20 the petition do not exceed $2,000,000;’’.

21 (b) CREDITORS’ COMMITTEES.—Section 1102(a) of

22 title 11, United States Code, is amended—

23 (1) in paragraph (1) by striking ‘‘As’’ and in24 serting ‘‘Except as provided in paragraph (3), as’’;

25 and
54

•HR 5116 RH

1 (2) by adding at the end the following:

2 ‘‘(3) On request of a party in interest in a case in

3 which the debtor is a small business and for cause, the court

4 may order that a committee of creditors not be appointed.’’.

5 (c) CONVERSION OR DISMISSAL.—Section 1112(b) of

6 title 11, United States Code, is amended by inserting ‘‘or

7 bankruptcy administrator’’ after ‘‘United States trustee’’.

8 (d) WHO MAY FILE A PLAN.—Section 1121 of title 11,

9 United States Code, is amended by adding at the end the

10 following:

11 ‘‘(e) In a case in which the debtor elects to be consid12 ered a small business—

13 ‘‘(1) only the debtor may file a plan until after

14 100 days after the date of the order for relief under

15 this chapter;

16 ‘‘(2) all plans shall be filed within 160 days

17 after the date of the order for relief; and

18 ‘‘(3) on request of a party in interest made with19 in the respective periods specified in paragraphs (1)

20 and (2) and after notice and a hearing, the court

21 may—

22 ‘‘(A) reduce the 100-day period or the 160-

23 day period specified in paragraph (1) or (2) for

24 cause; and
55

•HR 5116 RH

1 ‘‘(B) increase the 100-day period specified

2 in paragraph (1) if the debtor shows that the

3 need for an increase is caused by circumstances

4 for which the debtor should not be held account5 able.’’.

6 (e) POSTPETITION DISCLOSURE.—Section 1125 of title

7 11, United States Code, is amended by adding at the end

8 the following:

9 ‘‘(f) Notwithstanding subsection (b), in a case in which

10 the debtor is a small business—

11 ‘‘(1) the court may conditionally approve a dis12 closure statement subject to final approval after notice

13 and a hearing;

14 ‘‘(2) acceptances and rejections of a plan may be

15 solicited based on a conditionally approved disclosure

16 statement so long as the debtor provides adequate in17 formation to each holder of a claim or interest that

18 is solicited, but a conditionally approved disclosure

19 statement shall be mailed at least 10 days prior to the

20 date of the hearing on confirmation of the plan; and

21 ‘‘(3) a hearing on the disclosure statement may

22 be combined with a hearing on confirmation of a

23 plan.’’.
56

•HR 5116 RH

1 SEC. 219. SINGLE ASSET REAL ESTATE.

2 (a) DEFINITION.—Section 101 of title 11, United

3 States Code, is amended by inserting after paragraph (51)

4 the following:

5 ‘‘(51B) ‘single asset real estate’ means real prop6 erty constituting a single property or project, other

7 than residential real property with fewer than 4 resi8 dential units, which generates substantially all of the

9 gross income of a debtor and on which no substantial

10 business is being conducted by a debtor other than the

11 business of operating the real property and activities

12 incidental thereto having aggregate secured debts in

13 an amount no more than $2,000,000;’’.

14 (b) AUTOMATIC STAY.—Section 362 of title 11, United

15 States Code, is amended—

16 (1) in subsection (d)—

17 (A) in paragraph (1) by striking ‘‘or’’ at

18 the end,

19 (B) in paragraph (2) by striking the period

20 at the end and inserting ‘‘; or’’, and

21 (C) by adding at the end the following:

22 ‘‘(3) with respect to a stay of an act against sin23 gle asset real estate under subsection (a), by a creditor

24 whose claim is secured by an interest in such real es25 tate, unless, not later than the date that is 90 days

26 after the entry of the order for relief (or such later
57

•HR 5116 RH

1 date as the court may determine for cause by order

2 entered within that 90-day period)—

3 ‘‘(A) the debtor has filed a plan of reorga4 nization that has a reasonable possibility of

5 being confirmed within a reasonable time; or

6 ‘‘(B) the debtor has commenced monthly

7 payments to each creditor whose claim is secured

8 by such real estate (other than a claim secured

9 by a judgment lien), which payments are in an

10 amount equal to interest at a current fair mar11 ket rate on the value of the creditor’s interest in

12 the real estate.’’, and

13 (2) by adding at the end the following:

14 ‘‘(i)(1) An order under this section with respect to sin15 gle asset real estate shall not issue before the date that is

16 30 days after the date of entry of the order for relief, but

17 thereafter shall issue promptly after such a request.

18 ‘‘(2) A hearing shall not be required for the granting

19 of relief under this section with respect to single asset real

20 estate unless the debtor files an objection to the request and

21 shows the court extraordinary circumstances requiring such

22 a hearing.’’.

23 SEC. 220. LEASES OF PERSONAL PROPERTY.

24 (a) ASSUMPTION.—Section 365(b)(1) of title 11, Unit25 ed States Code is amended—
58

•HR 5116 RH

1 (1) in subparagraph (B) by striking ‘‘and’’ at

2 the end,

3 (2) in subparagraph (C) by striking the period

4 and inserting ‘‘; and’’,

5 (3) by adding at the end the following:

6 ‘‘(D) satisfy any penalty rate or provision relat7 ing to a default arising from any failure by the debt8 or to perform the obligations under the contract or ex9 ecutory lease after the order for relief.’’.

10 (b) PERFORMANCE.—Section 365(d) of title 11, United

11 States Code is amended by adding at the end the following:

12 ‘‘(10) The trustee shall timely perform all of the

13 obligations of the debtor, except those specified in sec14 tion 365(b)(2), arising more than 60 days after the

15 order for relief in a case under chapter 11 of this title

16 under an unexpired lease of personal property (other

17 than personal property leased to an individual pri18 marily for personal, family, or household purposes),

19 unless the court, after notice and a hearing and based

20 on cause or the equities of the case, orders otherwise.’’.

21 (c) LIMITATION.—Section 365(e) of title 11, United

22 States Code is amended by adding at the end the following:

23 ‘‘This subsection shall apply to property that is subject to

24 any unexpired lease of personal property (to the exclusion
59

•HR 5116 RH

1 of such property being subject to an order to lift the stay

2 under section 362).’’.

3 SEC. 221. EXEMPTION FOR SMALL BUSINESS INVESTMENT

4 COMPANIES.

5 Section 109 of title 11, United States Code, is amended

6 by adding at the end the following:

7 ‘‘(h) A small business investment company licensed by

8 the Small Business Administration under subsection (c) or

9 (d) of section the Small Business Investment Act of 1958

10 may not be a debtor under chapter 11 of this title.’’.

11 SEC. 222. PAYMENT OF TAXES WITH BORROWED FUNDS.

12 Section 523(a) of title 11, United States Code is

13 amended—

14 (1) in paragraph (13) by striking the period at

15 the end and inserting a semicolon, and

16 (3) by adding at the end the following:

17 ‘‘(14) incurred to pay a tax to the United States

18 that would be nondischargeable pursuant to para19 graph (1);’’.

20 SEC. 223. RETURN OF GOODS.

21 (a) LIMITATION ON AVOIDING POWERS.—Section 546

22 of title 11, United States Code, is amended by adding at

23 the end the following:

24 ‘‘(g) Notwithstanding the rights and powers of a trust25 ee under sections 544(a), 545, 547, 549, and 553, if the
60

•HR 5116 RH

1 court determines on a motion by the trustee made not later

2 than 120 days after the date of the order for relief in a

3 case under chapter 11 of this title and after notice and a

4 hearing, that a return is in the best interests of the estate,

5 the debtor, with the consent of a creditor, may return goods

6 shipped to the debtor by the creditor before the commence7 ment of the case, and the creditor may offset the purchase

8 price of such goods against any claim of the creditor against

9 the debtor that arose before the commencement of the case.’’.

10 (b) SETOFF.—Section 553(b)(1) is amended by insert11 ing ‘‘546(h),’’ after ‘‘365(h)(2),’’.

12 SEC. 224. PROCEEDS OF MONEY ORDER AGREEMENTS.

13 Section 541(b)(1) of title 11, United States Code, as

14 amended by section 213, is amended by inserting after

15 paragraph (5) the following:

16 ‘‘(6) any interest in cash or cash equivalents that

17 constitute proceeds of a sale by the debtor of a money

18 order that is made—

19 ‘‘(A) on or after the date that is 14 days

20 prior to the date on which the petition is filed;

21 and

22 ‘‘(B) under an agreement with a money

23 order issuer that prohibits the commingling of

24 such proceeds with property of the debtor (not25 withstanding that, contrary to the agreement, the
61

•HR 5116 RH

1 proceeds may have been commingled with prop2 erty of the debtor),

3 unless the money order issuer had not taken action,

4 prior to the filing of the petition, to require compli5 ance with the prohibition;’’.

6 SEC. 225. AIRPORT LEASES.

7 (a) EXECUTORY CONTRACTS AND UNEXPIRED

8 LEASES.—Section 365(d) of title 11, United States Code,

9 as amended by section 220, is amended by adding at the

10 end the following:

11 ‘‘(11) Notwithstanding paragraphs (1), (2), and (4),

12 if the trustee in a case under any chapter of this title does

13 not assume or reject an unexpired lease or executory con14 tract with an airport operator under which the debtor has

15 a right to the use or possession of an airport terminal, air16 craft gate, or related facility within 270 days after the date

17 of the order for relief, or within such additional time as

18 the court sets during such 270-day period, such lease or ex19 ecutory contract is deemed rejected unless the court finds

20 in such period (including such additional time) that the

21 debtor’s failure to assume or reject such lease or such con22 tract in such period is attributable to circumstances for

23 which the debtor should not be held accountable.’’.
62

•HR 5116 RH

1 SEC. 226. TRUSTEE DUTIES.

2 Section 586(a)(3)(A) of title 28, United States Code,

3 is amended to read as follows:

4 ‘‘(A)(i) reviewing, in accordance with proce5 dural guidelines adopted by the Executive Office

6 of the United States Trustee (which guidelines

7 shall be applied uniformly by the United States

8 trustee except when circumstances warrant dif9 ferent treatment), applications filed for com10 pensation and reimbursement under section 330

11 of title 11; and

12 ‘‘(ii) filing with the court comments with

13 respect to such application and, if the United

14 States Trustee considers it to be appropriate, ob15 jections to such application.’’.

16 SEC. 227. NOTICES TO CREDITORS.

17 Section 342 of title 11, United States Code, is amended

18 by adding at the end the following:

19 ‘‘(c) If notice is required to be given by the debtor to

20 a creditor under this title, any rule, any applicable law,

21 or any order of the court, such notice shall contain the

22 name, address, and taxpayer identification number of the

23 debtor, but the failure of such notice to contain such infor24 mation shall not invalidate the legal effect of such notice.’’.
63

•HR 5116 RH

1 TITLE III—CONSUMER

2 BANKRUPTCY ISSUES

3 SEC. 301. PERIOD FOR CURING DEFAULT RELATING TO

4 PRINCIPAL RESIDENCE.

5 Section 1322 of title 11, United States Code, is amend6 ed—

7 (1) by redesignating subsection (c) as subsection

8 (d), and

9 (2) by inserting after subsection (b) the follow10 ing:

11 ‘‘(c) Notwithstanding subsection (b)(2) and applicable

12 nonbankruptcy law—

13 ‘‘(1) a default with respect to, or that gave rise

14 to, a lien on the debtor’s principal residence may be

15 cured under paragraph (3) or (5) of subsection (b)

16 until such residence is sold at a foreclosure sale that

17 is conducted in accordance with applicable

18 nonbankruptcy law; and

19 ‘‘(2) in a case in which the last payment on the

20 original payment schedule for a claim secured only by

21 a security interest in real property that is the debtor’s

22 principal residence is due before the date on which the

23 final payment under the plan is due, the plan may

24 provide for the payment of the claim as modified pur25 suant to 1325(a)(5).’’.
64

•HR 5116 RH

1 SEC. 302. NONDISCHARGEABILITY OF FINE UNDER CHAP2 TER 13.

3 Section 1328(a)(3) of title 11, United States Code, is

4 amended by inserting ‘‘, or a fine (other than a fine im5 posed under subchapter C of chapter 227 of title 18 of the

6 United States Code) to the extent such fine exceeds $500,

7 ’’ after ‘‘restitution’’.

8 SEC. 303. IMPAIRMENT OF EXEMPTIONS.

9 Section 522(f) of title 11, United States Code, is

10 amended—

11 (1) in paragraph (2)—

12 (A) by redesignating subparagraphs (A),

13 (B), and (C) as clauses (i), (ii), and (iii), respec14 tively, and

15 (B) by striking ‘‘(2)’’ and inserting ‘‘(B),

16 (2) by redesignating paragraph (1) as subpara17 graph (A),

18 (3) by inserting ‘‘(1)’’ before ‘‘Notwithstanding’’,

19 and

20 (4) by adding at the end the following:

21 ‘‘(2)(A) For the purposes of this subsection, a lien shall

22 be considered to impair an exemption to the extent that the

23 sum of—

24 ‘‘(i) the lien,

25 ‘‘(ii) all other liens on the property that are

26 equal or greater in seniority to the lien; and
65

•HR 5116 RH

1 ‘‘(iii) the amount of the exemption that the debt2 or could claim if there were no liens on the property,

3 exceeds the value that the debtor’s interest in the

4 property would have in the absence of any liens.

5 ‘‘(B) In the case of a property subject to more than

6 1 lien, a lien that has been avoided shall not be considered

7 in making the calculation under subparagraph (A) with re8 spect to other liens.’’.

9 SEC. 304. PROTECTION OF CHILD SUPPORT AND ALIMONY.

10 (a) DEFINITION.—Section 101 of title 11, United

11 States Code, is amended by inserting after paragraph (12)

12 the following:

13 ‘‘(12A) ‘debt for child support’ means a debt of

14 a kind specified in section 523(a)(5) of this title for

15 maintenance or support of a child of the debtor;’’.

16 (b) RELIEF FROM AUTOMATIC STAY.—Section

17 362(b)(2) of title 11, United States Code, is amended to

18 read as follows:

19 ‘‘(2) under subsection (a) of this section—

20 ‘‘(A) of the commencement or continuation

21 of an action or proceeding for—

22 ‘‘(i) the establishment of paternity; or

23 ‘‘(ii) the establishment or modification

24 of an order for alimony, maintenance, or

25 support; or
66

•HR 5116 RH

1 ‘‘(B) of the collection of alimony, mainte2 nance, or support from property that is not

3 property of the estate;’’.

4 (c) PRIORITY OF CLAIMS.—Section 507(a) of title 11,

5 United States Code, is amended—

6 (1) in paragraph (8) by striking ‘‘(8) Eighth’’

7 and inserting ‘‘(9) Ninth’’,

8 (2) in paragraph (7) by striking ‘‘(7) Seventh’’

9 and inserting ‘‘(8) Eighth’’, and

10 (3) by inserting after paragraph (6) the follow11 ing:

12 ‘‘(7) Seventh, allowed claims for debts to a

13 spouse, former spouse, or child of the debtor, for ali14 mony to, maintenance for, or support of such spouse

15 or child, in connection with a separation agreement,

16 divorce decree or other order of a court of record, de17 termination made in accordance with State or terri18 torial law by a governmental unit, or property settle19 ment agreement, but not to the extent that such

20 debt—

21 ‘‘(A) is assigned to another entity, volun22 tarily, by operation of law, or otherwise; or

23 ‘‘(B) includes a liability designated as ali24 mony, maintenance, or support, unless such li-
67

•HR 5116 RH

1 ability is actually in the nature of alimony,

2 maintenance or support; or

3 (d) PROTECTION OF LIENS.—Section 522(f)(1)(A) of

4 title 11, United States Code, as amended by section 303,

5 is amended by inserting after ‘‘lien’’ the following:

6 ‘‘, other than a judicial a lien that secures a debt—

7 ‘‘(i) to a spouse, former spouse, or child of

8 the debtor, for alimony to, maintenance for, or

9 support of such spouse or child, in connection

10 with a separation agreement, divorce decree or

11 other order of a court of record, determination

12 made in accordance with State or territorial law

13 by a governmental unit, or property settlement

14 agreement; and

15 ‘‘(ii) to the extent that such debt—

16 ‘‘(I) is not assigned to another entity,

17 voluntarily, by operation of law, or other18 wise; and

19 ‘‘(II) includes a liability designated as

20 alimony, maintenance, or support, unless

21 such liability is actually in the nature of

22 alimony, maintenance or support.’’.

23 (e) EXCEPTION TO DISCHARGE.—Section 523 of title

24 11, United States Code, as amended by section 222, is

25 amended—
68

•HR 5116 RH

1 (1) in subsection (a) by adding at the end the

2 following:

3 ‘‘(15) incurred by the debtor in the course of a

4 divorce or separation or in connection with a separa5 tion agreement, divorce decree or other order of a

6 court of record, a determination made in accordance

7 with State or territorial law by a governmental unit

8 unless—

9 ‘‘(A) the debtor does not have the ability to

10 pay such debt from income or property of the

11 debtor not reasonably necessary to be expended

12 for the maintenance or support of the debtor or

13 a dependent of the debtor and, if the debtor is en14 gaged in a business, for the payment of expendi15 tures necessary for the continuation, preserva16 tion, and operation of such business; or

17 ‘‘(B) discharging such debt would result in

18 a benefit to the debtor that outweighs the det19 rimental consequences to a spouse, former spouse,

20 or child of the debtor; or’’, and

21 (2) in subsection (c)(1) by striking ‘‘or (6)’’ each

22 place it appears and inserting ‘‘(6), or (15)’’.

23 (f) PROTECTION AGAINST TRUSTEE AVOIDANCE.—Sec24 tion 547(c) of title 11, United States Code, is amended—
69

•HR 5116 RH

1 (1) in paragraph (6) by striking ‘‘or’’ at the

2 end,

3 (2) by redesignating paragraph (7) as para4 graph (8), and

5 (3) by inserting after paragraph (6) the fol6 lowing:

7 ‘‘(7) to the extent such transfer was a bona fide

8 payment of a debt to a spouse, former spouse, or child

9 of the debtor, for alimony to, maintenance for, or sup10 port of such spouse or child, in connection with a sep11 aration agreement, divorce decree or other order of a

12 court of record, determination made in accordance

13 with State or territorial law by a governmental unit,

14 or property settlement agreement, but not to the ex15 tent that such debt—

16 ‘‘(A) is assigned to another entity, volun17 tarily, by operation of law, or otherwise; or

18 ‘‘(B) includes a liability designated as ali19 mony, maintenance, or support, unless such li20 ability is actually in the nature of alimony,

21 maintenance or support.’’.

22 (g) APPEARANCE BEFORE COURT.—Child support

23 creditors or their representatives shall be permitted to ap24 pear and intervene without charge, and without meeting

25 any special local court rule requirement for attorney ap-
70

•HR 5116 RH

1 pearances, in any bankruptcy case or proceeding in any

2 bankruptcy court or district court of the United States if

3 such creditors or representatives file a form in such court

4 that contains information detailing the child support debt,

5 its status, and other characteristics.

6 (h) CONFORMING AMENDMENTS—Title 11 of the Unit7 ed States Code is amended—

8 (1) in section 502(i) by striking ‘‘507(a)(7)’’ and

9 inserting ‘‘507(a)(8)’’,

10 (2) in section 503(b)(1)(B)(i) by striking

11 ‘‘507(a)(7)’’ and inserting ‘‘507(a)(8)’’,

12 (3) in section 523(a)(1)(A) by striking

13 ‘‘507(a)(7)’’ and inserting ‘‘507(a)(8)’’,

14 (4) in section 724(b)(2) by striking ‘‘or

15 507(a)(6)’’ and inserting ‘‘507(a)(6), or 507(a)(7)’’,

16 (5) in section 726(b) by striking ‘‘or (7)’’ and

17 inserting ‘‘, (7), or (8)’’,

18 (6) in section 1123(a)(1) by striking ‘‘507(a)(7)’’

19 and inserting ‘‘507(a)(8)’’,

20 (7) in section 1129(a)(9)—

21 (i) in subparagraph (B) by striking ‘‘or

22 507(a)(6)’’ and inserting ‘‘, 507(a)(6), or

23 507(a)(7)’’, and

24 (ii) in subparagraph (C) by striking

25 ‘‘507(a)(7)’’ and inserting ‘‘507(a)(8)’’.
71

•HR 5116 RH

1 SEC. 305. INTEREST ON INTEREST.

2 (a) CHAPTER 11.—Section 1123 of title 11, United

3 States Code, is amended by adding at the end the following:

4 ‘‘(d) Notwithstanding subsection (a) of this section and

5 sections 506(b), 1129(a)(7), and 1129(b) of this title, if it

6 is proposed in a plan to cure a default, the amount nec7 essary to cure the default, shall be determined in accordance

8 with the underlying agreement and applicable

9 nonbankruptcy law.’’.

10 (b) CHAPTER 12.—Section 1222 of title 11, United

11 States Code, is amended by adding at the end the following:

12 ‘‘(d) Notwithstanding subsection (b)(2) of this section

13 and sections 506(b) and 1225(a)(5) of this title, if it is pro14 posed in a plan to cure a default, the amount necessary

15 to cure the default, shall be determined in accordance with

16 the underlying agreement and applicable nonbankruptcy

17 law.’’.

18 (c) CHAPTER 13.—Section 1322 of title 11, United

19 States Code, as amended by section 301, is amended by add20 ing at the end the following:

21 ‘‘(e) Notwithstanding subsection (b)(2) of this section

22 and sections 506(b) and 1325(a)(5) of this title, if it is pro23 posed in a plan to cure a default, the amount necessary

24 to cure the default, shall be determined in accordance with

25 the underlying agreement and applicable nonbankruptcy

26 law.’’.
72

•HR 5116 RH

1 SEC. 306. EXCEPTION TO DISCHARGE.

2 Section 523(a)(2)(C) of title 11, United States Code,

3 is amended—

4 (1) by striking ‘‘$500’’ and inserting ‘‘$1,500’’,

5 (2) by striking ‘‘forty’’ and inserting ‘‘60’’,

6 (3) by striking ‘‘$1,000’’ and inserting ‘‘$1,500’’,

7 and

8 (4) by striking ‘‘twenty’’ and inserting ‘‘60’’.

9 SEC. 307. PAYMENTS UNDER CHAPTER 13.

10 Section 1326(a)(2) of title 11, United States Code, is

11 amended in the second sentence by striking the period and

12 inserting ‘‘as soon as practicable.’’.

13 SEC. 308. BANKRUPTCY PETITION PREPARERS.

14 (a) AMENDMENT OF CHAPTER 1.—Chapter 1 of title

15 11, United States Code, is amended by adding at the end

16 the following:

17 ‘‘§ 110. Penalty for persons who negligently or fraudu18 lently prepare bankruptcy petitions.

19 ‘‘(a) In this section—

20 ‘‘(1) ‘bankruptcy petition preparer’ means a per21 son, other than an attorney or an employee of an at22 torney, who prepares for compensation a document

23 for filing; and

24 ‘‘(2) ‘document for filing’ means a petition or

25 any other document prepared for filing by a debtor

26 in a United States bankruptcy court or a United
73

•HR 5116 RH

1 States district court in connection with a case under

2 this title.

3 ‘‘(b)(1) A bankruptcy petition preparer who prepares

4 a document for filing shall sign the document and print

5 on the document the preparer’s name and address.

6 ‘‘(2) A bankruptcy petition preparer who fails to com7 ply with paragraph (1) may be fined not more than $500

8 for each such failure unless the failure is due to reasonable

9 cause.

10 ‘‘(c)(1) A bankruptcy petition preparer who prepares

11 a document for filing shall place on the document, after the

12 preparer’s signature, an identifying number that identifies

13 the individuals who prepared the document.

14 ‘‘(2) For purposes of this section, the identifying num15 ber of a bankruptcy petition preparer shall be the Social

16 Security account number of each individual who prepared

17 the document or assisted in its preparation.

18 ‘‘(3) A bankruptcy petition preparer who fails to com19 ply with paragraph (1) may be fined not more than $500

20 for each such failure unless the failure is due to reasonable

21 cause.

22 ‘‘(d)(1) A bankruptcy petition preparer shall, not later

23 than the time at which a document for filing is presented

24 for the debtor’s signature, furnish to the debtor a copy of

25 the document.
74

•HR 5116 RH

1 ‘‘(2) A bankruptcy petition preparer who fails to com2 ply with paragraph (1) may be fined not more than $500

3 for each such failure unless the failure is due to reasonable

4 cause.

5 ‘‘(e)(1) A bankruptcy petition preparer shall not exe6 cute any document on behalf of a debtor.

7 ‘‘(2) A bankruptcy petition preparer may be fined not

8 more than $500 for each document executed in violation

9 of paragraph (1).

10 ‘‘(f)(1) A bankruptcy petition preparer shall not use

11 the word ‘legal’ or any similar term in any advertisements,

12 or advertise under any category that includes the word

13 ‘legal’ or any similar term.

14 ‘‘(2) A bankruptcy petition preparer shall be fined not

15 more than $500 for each violation of paragraph (1).

16 ‘‘(g)(1) A bankruptcy petition preparer shall not col17 lect or receive any payment from the debtor or on behalf

18 of the debtor for the court fees in connection with filing the

19 petition.

20 ‘‘(2) A bankruptcy petition preparer shall be fined not

21 more than $500 for each violation of paragraph (1).

22 ‘‘(h)(1) Within 10 days after the date of the filing of

23 a petition, a bankruptcy petition preparer shall file a dec24 laration under penalty of perjury disclosing any fee re25 ceived from or on behalf of the debtor within 12 months
75

•HR 5116 RH

1 immediately prior to the filing of the case, and any unpaid

2 fee charged to the debtor.

3 ‘‘(2) The court shall disallow and order the immediate

4 turnover to the bankruptcy trustee of any fee referred to

5 in paragraph (1) found to be in excess of the value of typing

6 services for the documents prepared. The debtor may exempt

7 any funds so recovered under section 522(b).

8 ‘‘(3) The debtor, the trustee, a creditor, or the United

9 States trustee may file a motion for an order under para10 graph (2).

11 ‘‘(4) A bankruptcy petition preparer shall be fined not

12 more than $500 for each failure to comply with a court

13 order to turn over funds within 30 days of service of such

14 order.

15 ‘‘(i)(1) If a bankruptcy case or related proceeding is

16 dismissed because of the failure to file bankruptcy forms,

17 the negligence or intentional disregard of this title or the

18 Federal Rules of Bankruptcy Procedure by a bankruptcy

19 petition preparer, or if a bankruptcy petition preparer vio20 lates this section or commits any fraudulent, unfair, or de21 ceptive act, the bankruptcy court shall certify that fact to

22 the district court, and the district court, on motion of the

23 debtor, the trustee, or a creditor and after a hearing, shall

24 order the bankruptcy petition preparer to pay to the debt25 or—
76

•HR 5116 RH

1 ‘‘(A) the debtor’s actual damages;

2 ‘‘(B) the greater of—

3 ‘‘(i) $2,000; or

4 ‘‘(ii) twice the amount paid by the debtor to

5 the bankruptcy petition preparer for the prepar6 er’s services; and

7 ‘‘(C) reasonable attorneys’ fees and costs in mov8 ing for damages under this subsection.

9 ‘‘(2) If the trustee or creditor moves for damages on

10 behalf of the debtor under this subsection, the bankruptcy

11 petition preparer shall be ordered to pay the movant the

12 additional amount of $1,000 plus reasonable attorneys’ fees

13 and costs incurred.

14 ‘‘(j)(1) A debtor for whom a bankruptcy petition pre15 parer has prepared a document for filing, the trustee, a

16 creditor, or the United States trustee in the district in

17 which the bankruptcy petition preparer resides, has con18 ducted business, or the United States trustee in any other

19 district in which the debtor resides may bring a civil action

20 to enjoin a bankruptcy petition preparer from engaging in

21 any conduct in violation of this section or from further act22 ing as a bankruptcy petition preparer.

23 ‘‘(2)(A) In an action under paragraph (1), if the court

24 finds that—

25 ‘‘(i) a bankruptcy petition preparer has—
77

•HR 5116 RH

1 ‘‘(I) engaged in conduct in violation of this

2 section or of any provision of this title a viola3 tion of which subjects a person to criminal pen4 alty;

5 ‘‘(II) misrepresented the preparer’s experi6 ence or education as a bankruptcy petition pre7 parer; or

8 ‘‘(III) engaged in any other fraudulent, un9 fair, or deceptive conduct; and

10 ‘‘(ii) injunctive relief is appropriate to prevent

11 the recurrence of such conduct,

12 the court may enjoin the bankruptcy petition preparer from

13 engaging in such conduct.

14 ‘‘(B) If the court finds that a bankruptcy petition pre15 parer has continually engaged in conduct described in

16 subclause (I), (II), or (III) of clause (i) and that an injunc17 tion prohibiting such conduct would not be sufficient to pre18 vent such person’s interference with the proper administra19 tion of this title, or has not paid a penalty imposed under

20 this section, the court may enjoin the person from acting

21 as a bankruptcy petition preparer.

22 ‘‘(3) The court shall award to a debtor, trustee, or cred23 itor that brings a successful action under this subsection

24 reasonable attorney’s fees and costs of the action, to be paid

25 by the bankruptcy petition preparer.
78

•HR 5116 RH

1 ‘‘(k) Nothing in this section shall be construed to per2 mit activities that are otherwise prohibited by law, includ3 ing rules and laws that prohibit the unauthorized practice

4 of law.’’.

5 (b) The chapter analysis for chapter 1 of title 11, Unit6 ed States Code, is amended by adding at the end the follow7 ing new item:

‘‘110. Penalty for persons who negligently or fraudulently prepare bankruptcy petitions.’’.

8 SEC. 309. FAIRNESS TO CONDOMINIUM AND COOPERATIVE

9 OWNERS.

10 Section 523(a) of title 11, United States Code, as

11 amended by sections 222 and 304, is amended by adding

12 at the end the following:

13 ‘‘(16) for a fee that becomes due and payable

14 after the order for relief to a membership association

15 with respect to the debtor’s interest in a dwelling unit

16 that has condominium ownership or in a share of a

17 cooperative housing corporation, if such fee is payable

18 for a period during which—

19 ‘‘(A) the debtor physically occupied a dwell20 ing unit in the condominium or cooperative

21 project; or

22 ‘‘(B) the debtor rented the dwelling unit to

23 a tenant and received payments from the tenant

24 for such period,
79

•HR 5116 RH

1 but nothing in this paragraph shall except from dis2 charge the debt of a debtor for a membership associa3 tion fee for a period arising before entry of the order

4 for relief in a pending or subsequent bankruptcy pro5 ceeding.’’.

6 SEC. 310. NONAVOIDABILITY OF FIXING OF LIEN ON TOOLS

7 AND IMPLEMENTS OF TRADE, ANIMALS, AND

8 CROPS.

9 Section 522(f) of title 11, United States Code, as

10 amended by sections 303 and 304, is amended—

11 (1) in paragraph (1) by inserting ‘‘but subject to

12 paragraph (3)’’ after ‘‘waiver of exemptions’’, and

13 (2) by adding at the end the following:

14 ‘‘(3) In a case in which State law that is applicable

15 to the debtor—

16 ‘‘(A) permits a person to voluntarily waive a

17 right to claim exemptions under subsection (d) or

18 prohibits a debtor from claiming exemptions under

19 subsection (d); and

20 ‘‘(B) either permits the debtor to claim exemp21 tions under State law without limitation in amount,

22 except to the extent that the debtor has permitted the

23 fixing of a consensual lien on any property or pro24 hibits avoidance of a consensual lient on property

25 otherwise eligible to be claimed as exempt property;
80

•HR 5116 RH

1 the debtor may not avoid the fixing of a lien on an interest

2 of the debtor or a dependent of the debtor in property if

3 the lien is a nonpossessory, nonpurchase-money security in4 terest in implements, professional books, or tools of the trade

5 of the debtor or a dependent of the debtor or farm animals

6 or crops of the debtor or a dependent of the debtor to the

7 extent such lien exceeds $5,000.’’.

8 SEC. 311. CONVERSION OF CASE UNDER CHAPTER 13.

9 Section 348 of title 11, United States Code, is amended

10 by adding at the end the following:

11 ‘‘(f)(1) Notwithstanding any other provision of this

12 title, the debtor may not convert a case to a case under

13 chapter 13 in bad faith.

14 ‘‘(2) When a case under chapter 13 of this title is con15 verted to another chapter under this title—

16 ‘‘(A) property of the estate in the converted case

17 shall consist of property of the estate, as of the date

18 of filing of the petition, that remains in the possession

19 of or is under the control of the debtor on the date of

20 conversion; and

21 ‘‘(B) valuations of property and of allowed se22 cured claims in the chapter 13 case shall apply in the

23 converted case, with allowed secured claims reduced to

24 the extent that they have been paid in accordance

25 with the chapter 13 plan.’’.
81

•HR 5116 RH

1 SEC. 312. BANKRUPTCY FRAUD.

2 (a) IN GENERAL.—

3 (1) OFFENSES.—Chapter 9 of title 18, United

4 States Code, is amended—

5 (A) by amending sections 152, 153, and 154

6 to read as follows:

7 ‘‘§ 152. Concealment of assets; false oaths and claims;

8 bribery

9 ‘‘A person who—

10 ‘‘(1) knowingly and fraudulently conceals from a

11 custodian, trustee, marshal, or other officer of the

12 court charged with the control or custody of property,

13 or, in connection with a case under title 11, from

14 creditors or the United States Trustee, any property

15 belonging to the estate of a debtor;

16 ‘‘(2) knowingly and fraudulently makes a false

17 oath or account in or in relation to any case under

18 title 11;

19 ‘‘(3) knowingly and fraudulently makes a false

20 declaration, certificate, verification, or statement

21 under penalty of perjury as permitted under section

22 1746 of title 28, in or in relation to any case under

23 title 11;

24 ‘‘(4) knowingly and fraudulently presents any

25 false claim for proof against the estate of a debtor, or

26 uses any such claim in any case under title 11, in
82

•HR 5116 RH

1 a personal capacity or as or through an agent, proxy,

2 or attorney;

3 ‘‘(5) knowingly and fraudulently receives any

4 material amount of property from a debtor after the

5 filing of a case under title 11, with intent to defeat

6 the provisions of title 11;

7 ‘‘(6) knowingly and fraudulently gives, offers, re8 ceives, or attempts to obtain any money or property,

9 remuneration, compensation, reward, advantage, or

10 promise thereof for acting or forbearing to act in any

11 case under title 11;

12 ‘‘(7) in a personal capacity or as an agent or of13 ficer of any person or corporation, in contemplation

14 of a case under title 11 by or against the person or

15 any other person or corporation, or with intent to de16 feat the provisions of title 11, knowingly and fraudu17 lently transfers or conceals any of his property or the

18 property of such other person or corporation;

19 ‘‘(8) after the filing of a case under title 11 or

20 in contemplation thereof, knowingly and fraudulently

21 conceals, destroys, mutilates, falsifies, or makes a false

22 entry in any recorded information (including books,

23 documents, records, and papers) relating to the prop24 erty or financial affairs of a debtor; or
83

•HR 5116 RH

1 ‘‘(9) after the filing of a case under title 11,

2 knowingly and fraudulently withholds from a custo3 dian, trustee, marshal, or other officer of the court or

4 a United States Trustee entitled to its possession, any

5 recorded information (including books, documents,

6 records, and papers) relating to the property or fi7 nancial affairs of a debtor,

8 shall be fined not more than $5,000, imprisoned not more

9 than 5 years, or both.

10 ‘‘§ 153. Embezzlement against estate

11 ‘‘(a) OFFENSE.—A person described in subsection (b)

12 who knowingly and fraudulently appropriates to the per13 son’s own use, embezzles, spends, or transfers any property

14 or secretes or destroys any document belonging to the estate

15 of a debtor shall be fined not more than $5,000, imprisoned

16 not more than 5 years, or both.

17 ‘‘(b) PERSON TO WHOM SECTION APPLIES.—A person

18 described in this subsection is one who has access to prop19 erty or documents belonging to an estate by virtue of the

20 person’s participation in the administration of the estate

21 as a trustee, custodian, marshal, attorney, or other officer

22 of the court or as an agent, employee, or other person en23 gaged by such an officer to perform a service with respect

24 to the estate.
84

•HR 5116 RH

1 ‘‘§ 154. Adverse interest and conduct of officers

2 ‘‘A person who, being a custodian, trustee, marshal,

3 or other officer of the court—

4 ‘‘(1) knowingly purchases, directly or indirectly,

5 any property of the estate of which the person is such

6 an officer in a case under title 11;

7 ‘‘(2) knowingly refuses to permit a reasonable

8 opportunity for the inspection by parties in interest

9 of the documents and accounts relating to the affairs

10 of estates in the person’s charge by parties when di11 rected by the court to do so; or

12 ‘‘(3) knowingly refuses to permit a reasonable

13 opportunity for the inspection by the United States

14 Trustee of the documents and accounts relating to the

15 affairs of an estate in the person’s charge,

16 shall be fined not more than $5,000 and shall forfeit the

17 person’s office, which shall thereupon become vacant.’’; and

18 (B) by adding at the end the following:

19 ‘‘§ 156. Knowing disregard of bankruptcy law or rule

20 ‘‘(a) DEFINITIONS.—In this section—

21 ‘‘ ‘bankruptcy petition preparer’ means a person,

22 other than the debtor’s attorney or an employee of

23 such an attorney, who prepares for compensation a

24 document for filing.

25 ‘‘ ‘document for filing’ means a petition or any

26 other document prepared for filing by a debtor in a
85

•HR 5116 RH

1 United States bankruptcy court or a United States

2 district court in connection with a case under this

3 title.

4 ‘‘(b) OFFENSE.—If a bankruptcy case or related pro5 ceeding is dismissed because of a knowing attempt by a

6 bankruptcy petition preparer in any manner to disregard

7 the requirements of title 11, United States Code, or the Fed8 eral Rules of Bankruptcy Procedure, the bankruptcy peti9 tion preparer shall be fined under this title, imprisoned not

10 more than 1 year, or both.

11 ‘‘§ 157. Bankruptcy fraud

12 ‘‘(a) OFFENSE.—A person who, having devised or in13 tending to devise a scheme or artifice to defraud and for

14 the purpose of executing or concealing such a scheme or ar15 tifice or attempting to do so—

16 ‘‘(1) files a petition under title 11;

17 ‘‘(2) files a document in a proceeding under title

18 11; or

19 ‘‘(3) makes a false or fraudulent representation,

20 claim, or promise concerning or in relation to a pro21 ceeding under title 11, at any time before or after the

22 filing of the petition, or in relation to a proceeding

23 falsely asserted to be pending under such title,

24 shall be fined under this title, imprisoned not more than

25 5 years, or both.
86

•HR 5116 RH

1 ‘‘(b) REQUIREMENT OF INTENT.—

2 ‘‘(1) IN GENERAL.—The degree of intent required

3 to be shown in the case of an offense described in sub4 section (a) is that which is generally required to be

5 shown in cases of fraud.

6 ‘‘(2) VIOLATION NOT ESTABLISHED.—A violation

7 of subsection (a) is not established if the defendant

8 committed the act that is alleged to constitute fraud

9 for a lawful purpose.

10 ‘‘(3) VIOLATION ESTABLISHED.—A violation of

11 subsection (a) may be established if the defendant

12 committed the act that is alleged to constitute fraud

13 with a purpose of—

14 ‘‘(A) preventing the proper application of

15 title 11 in a particular case; or

16 ‘‘(B) using a proceeding under title 11 in a

17 manner that, while on its face may appear to be

18 legitimate, is in fact part of a scheme to de19 fraud.’’.

20 (2) TECHNICAL AMENDMENTS.—The chapter

21 analysis for chapter 9 of title 18, United States Code,

22 is amended—

23 (A) by amending the item relating to sec24 tion 153 to read as follows:

‘‘Sec. 153. Embezzlement against estate.’’;

25 and
87

•HR 5116 RH

1 (B) by adding at the end the following new

2 item:

‘‘Sec. 156. Knowing disregard of bankruptcy law or rule.

‘‘Sec. 157. Bankruptcy fraud.’’.

3 (b) RICO.—Section 1961(1)(D) of title 18, United

4 States Code, is amended by inserting ‘‘(except a case under

5 section 157 of that title)’’ after ‘‘title 11’’.

6 SEC. 313. PROTECTION AGAINST DISCRIMINATORY TREAT7 MENT OF APPLICATIONS FOR STUDENT

8 LOANS.

9 Section 525 of title 11, United States Code, is amended

10 by adding at the end the following:

11 ‘‘(c)(1) A governmental unit that operates a student

12 grant or loan program and a person engaged in a business

13 that includes the making of loans guaranteed or insured

14 under a student loan program may not deny a grant, loan,

15 loan guarantee, or loan insurance to a person that is or

16 has been a debtor under this title or a bankrupt or debtor

17 under the Bankruptcy Act, or another person with whom

18 the debtor or bankrupt has been associated, because the debt19 or or bankrupt is or has been a debtor under this title or

20 a bankrupt or debtor under the Bankruptcy Act, has been

21 insolvent before the commencement of a case under this title

22 or during the pendency of the case but before the debtor is

23 granted or denied a discharge, or has not paid a debt that
88

•HR 5116 RH

1 is dischargeable in the case under this title or that was dis2 charged under the Bankruptcy Act.

3 ‘‘(2) In this section, ‘student loan program’ means the

4 program operated under part B, D, or E of title IV of the

5 Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) or

6 a similar program operated under State or local law.’’.

7 TITLE IV—GOVERNMENTAL

8 BANKRUPTCY ISSUES

9 SEC. 401. EXCEPTION FROM AUTOMATIC STAY FOR POST10 PETITION PROPERTY TAXES.

11 Section 362(b) of title 11, United States Code, is

12 amended by inserting after paragraph (16) the following:

13 ‘‘(18) under subsection (a) of the creation or per14 fection of a statutory lien for an ad valorem property

15 tax imposed by the District of Columbia, or a politi16 cal subdivision of a State, if such tax comes due after

17 the filing of the petition.’’.

18 SEC. 402. MUNICIPAL BANKRUPTCY.

19 Section 109(c)(2) of title 11, United States Code, is

20 amended by striking ‘‘generally authorized’’ and inserting

21 ‘‘specifically authorized, in its capacity as a municipality

22 or by name,’’.
89

•HR 5116 RH

1 TITLE V—TECHNICAL

2 CORRECTIONS

3 SEC. 501. AMENDMENTS TO BANKRUPTCY DEFINITIONS, NE4 CESSITATED BY ENACTMENT OF PUBLIC LAW

5 101–647.

6 (a) ALPHABETIZING AND REDESIGNATING DEFINI7 TIONS.—Section 101 of title 11 of the United States Code,

8 as amended by sections 208, 218, 219, and 304 is amend9 ed—

10 (1) by redesignating paragraph (3) as para11 graph (21B) and transferring such paragraph so as

12 to insert it after paragraph (21A),

13 (2) by redesignating paragraph (39) as para14 graph (51A) and transferring such paragraph so as

15 to insert it after paragraph (51),

16 (3) by redesignating paragraphs (54) through

17 (57), as so redesignated by section 2522(e) of Public

18 Law 101–647, as paragraphs (53A) through (53D),

19 respectively,

20 (4) by redesignating paragraph (56) as in effect

21 immediately before the enactment of Public Law 101–

22 647, as paragraph (35A) and transferring such para23 graph so as to insert it after paragraph (35),

24 (5) by redesignating paragraph (57), as in effect

25 immediately before the enactment of Public Law 101–
90

•HR 5116 RH

1 647, as paragraph (39) and transferring such para2 graph so as to insert it after paragraph (38),

3 (6) by redesignating paragraphs (54) and (55),

4 as in effect immediately before the enactment of Pub5 lic Law 101–647, as paragraphs (65) and (66), re6 spectively,

7 (7) by redesigating paragraphs (21A) through

8 (53D) as paragraphs (22) through (64), respectively,

9 and

10 (8) by redesignating paragraphs (4) through

11 (12A) as paragraphs (3) through (12), respectively.

12 (b) CONFORMING AND RELATED AMENDMENTS TO

13 TITLE 11 OF THE UNITED STATES CODE, BASED ON RE14 DESIGNATED DEFINITIONS.—(1) Section 101 of title 11 of

15 the United States Code, as amended by subsection (a), is

16 amended—

17 (A) in paragraph (5), as so redesignated, by

18 striking ‘‘section 761(9)’’ and inserting ‘‘section 761’’,

19 (B) in paragraph (24), as so redesignated, by

20 striking ‘‘section 741(7)’’ and inserting ‘‘section 741’’,

21 (C) in paragraph (37)(B), as so redesignated, by

22 striking ‘‘paragraphs (3) and (33)(A)’’ and inserting

23 ‘‘paragraphs (23) and (35)(A)’’,
91

•HR 5116 RH

1 (D) in paragraph (53)(B)(ii), as so redesignated,

2 by striking ‘‘section 761(13)’’ and inserting ‘‘section

3 761’’, and

4 (E) in paragraph (61)(A), as so redesignated, by

5 striking ‘‘section 741(2)’’ and inserting ‘‘section 741’’.

6 (2) Section 362(b) of title 11, United States Code, is

7 amended—

8 (A) in paragraph (6)—

9 (i) by striking ‘‘section 761(4)’’ and insert10 ing ‘‘section 761’’,

11 (ii) by striking ‘‘section 741(7)’’ and insert12 ing ‘‘section 741’’,

13 (iii) by striking ‘‘section 101(34), 741(5), or

14 761(15)’’ and inserting ‘‘section 101, 741, or

15 761’’, and

16 (iv) by striking ‘‘section 101(35) or 741(8)’’

17 and inserting ‘‘section 101 or 741’’, and

18 (B) in paragraph (7)—

19 (i) by striking ‘‘section 741(5) or 761(15)’’

20 and inserting ‘‘section 741 or 761’’, and

21 (ii) by striking ‘‘section 741(8)’’ and insert22 ing ‘‘section 741’’.

23 (3) Section 507(a)(5) of title 11, United States Code,

24 is amended—
92

•HR 5116 RH

1 (A) by striking ‘‘section 557(b)(1)’’ and inserting

2 ‘‘section 557(b)’’, and

3 (B) by striking ‘‘section 557(b)(2)’’ and inserting

4 ‘‘section 557(b)’’.

5 (4) Section 546 of title 11, United States Code, is

6 amended—

7 (A) in subsection (e)—

8 (i) by striking ‘‘section 101(34), 741(5), or

9 761(15)’’ and inserting ‘‘section 101, 741, or

10 761’’, and

11 (ii) by striking ‘‘section 101(35) or 741(8)’’

12 and inserting ‘‘section 101 or 741’’, and

13 (B) in subsection (f)—

14 (i) by striking ‘‘section 741(5) or 761(15)’’

15 and inserting ‘‘section 741 or 761’’, and

16 (ii) by striking ‘‘section 741(8)’’ and insert17 ing ‘‘section 741’’.

18 (5) Section 548(d)(2) of title 11, United States Code,

19 is amended—

20 (A) in subparagraph (B)—

21 (i) by striking ‘‘section 101(34), 741(5) or

22 761(15)’’ and inserting ‘‘section 101, 741, or

23 761’’, and

24 (ii) by striking ‘‘section 101(35) or 741(8)’’

25 and inserting ‘‘section 101 or 741’’, and
93

•HR 5116 RH

1 (B) in subparagraph (C)—

2 (i) by striking ‘‘section 741(5) or 761(15)’’

3 and inserting ‘‘section 741 or 761’’, and

4 (ii) by striking ‘‘section 741(8)’’ and insert5 ing ‘‘section 741’’.

6 (6) Section 555 of title 11, United States Code, is

7 amended by striking ‘‘section 741(7)’’ and inserting ‘‘sec8 tion 741 of this title’’.

9 (7) Section 556 of title 11, United States Code, is

10 amended by striking ‘‘section 761(4)’’ and inserting ‘‘sec11 tion 761 of this title’’.

12 (c) CONFORMING AMENDMENTS TO OTHER LAWS

13 BASED ON REDESIGNATED DEFINITIONS.—(1) Section

14 207(c)(8)(D) of the Federal Credit Union Act (12 U.S.C.

15 1787(c)(8)(D)) is amended—

16 (A) in clause (ii)(I) by striking ‘‘section 741(7)’’

17 and inserting ‘‘section 741’’,

18 (B) in clause (iii) by striking ‘‘section 101(24)’’

19 and inserting ‘‘section 101’’,

20 (C) in clause (iv)(I) by striking ‘‘section

21 101(41)’’ and inserting ‘‘section 101’’, and

22 (D) in clause (v) by striking ‘‘section 101(50)’’

23 and inserting ‘‘section 101’’.

24 (2) Section 11(e)(8)(D) of the Federal Deposit Insur25 ance Act (12 U.S.C. 1821(e)(8)(D)) is amended—
94

•HR 5116 RH

1 (A) in clause (ii)(I) by striking ‘‘section 741(7)’’

2 and inserting ‘‘section 741’’,

3 (B) in clause (iii) by striking ‘‘section 761(4)’’

4 and inserting ‘‘section 761’’,

5 (C) in clause (iv) by striking ‘‘section 101(24)’’

6 and inserting ‘‘section 101’’,

7 (D) in clause (v)(I) by striking ‘‘section

8 101(41)’’ and inserting ‘‘section 101’’, and

9 (E) in clause (viii) by striking ‘‘section 101(50)’’

10 and inserting ‘‘section 101’’.

11 (d) OTHER TECHNICAL AMENDMENTS.—Title 11 of the

12 United States Code is amended—

13 (1) in section 101, as amended by subsection

14 (a)—

15 (A) in paragraph (35), as so redesignated—

16 (i) in subparagraph (A) by striking

17 ‘‘(12 U.S.C. 1813(u))’’, and

18 (ii) in subparagraph (B) by striking

19 ‘‘(12 U.S.C. 1786(r))’’,

20 (B) in paragraph (36), as so redesignated,

21 by striking ‘‘(12 U.S.C. 1752(7))’’,

22 (C) in paragraph (37)(A), as so redesig23 nated, by striking ‘‘(12 U.S.C. 1813(c)(2))’’,

24 (D) in paragraph (52), as so redesignated—
95

•HR 5116 RH

1 (i) by striking ‘‘(15 U.S.C. 78q-1)’’,

2 and

3 (ii) by striking ‘‘(15 U.S.C. 78c(12))’’,

4 (E) in paragraph (53), as so redesignated—

5 (i) in subparagraph (A)(xii)—

6 (I) by striking ‘‘(15 U.S.C. 77a et

7 seq.)’’, and

8 (II) by striking ‘‘(15 U.S.C.

9 77c(b))’’, and

10 (ii) in subparagraph (B)(vi) by strik11 ing ‘‘(15 U.S.C. 77c(b))’’, and

12 (F) in paragraph (64), as so redesignated,

13 by striking the period at the end and inserting

14 a semicolon,

15 (2) in section 109(b)(2) by striking ‘‘(12 U.S.C.

16 1813(h))’’,

17 (3) in section 322(a) by striking ‘‘1302, or 1202’’

18 and inserting ‘‘1202, or 1302’’,

19 (4) in section 346—

20 (A) in subsection (a) by striking ‘‘Internal

21 Revenue Code of 1954 (26 U.S.C. 1 et seq.)’’ and

22 inserting ‘‘Internal Revenue Code of 1986’’, and

23 (B) in subsection (g)(1)(C) by striking ‘‘In24 ternal Revenue Code of 1954 (26 U.S.C. 371)’’

25 and inserting ‘‘Internal Revenue Code of 1986’’,
96

•HR 5116 RH

1 (5) in section 348—

2 (A) in subsection (b) by striking ‘‘1301(a),

3 1305(a), 1201(a), 1221, and 1228(a)’’ and in4 serting ‘‘1201(a), 1221, 1228(a), 1301(a), and

5 1305(a)’’, and

6 (B) in subsections (b), (c), (d), and (e) by

7 striking ‘‘1307, or 1208’’ each place it appears

8 and inserting ‘‘1208, or 1307’’,

9 (6) in section 349(a) by striking ‘‘109(f)’’ and

10 inserting ‘‘109(g)’’,

11 (7) in section 362—

12 (A) in subsection (a) by striking ‘‘(15

13 U.S.C. 78eee(a)(3))’’, and

14 (B) in subsection (b)—

15 (i) by striking ‘‘(15 U.S.C.

16 78eee(a)(3))’’,

17 (ii) in paragraph (10) by striking ‘‘or’’

18 at the end,

19 (iii) in paragraph (12)—

20 (I) by striking ‘‘the Ship Mort21 gage Act, 1920 (46 App. U.S.C. 911 et

22 seq.)’’ and inserting ‘‘section 31325 of

23 title 46’’, and

24 (II) by striking ‘‘(46 App. U.S.C.

25 1117 and 1271 et seq., respectively)’’,
97

•HR 5116 RH

1 (iv) in paragraph (13)—

2 (I) by striking ‘‘the Ship Mort3 gage Act, 1920 (46 App. U.S.C. 911 et

4 seq.)’’ each place it appears and insert5 ing ‘‘section 31325 of title 46’’,

6 (II) by striking ‘‘(46 App. U.S.C.

7 1117 and 1271 et seq., respectively)’’,

8 and

9 (III) by striking ‘‘or’’ at the end,

10 (v) in paragraph (15), as added by

11 Public Law 101–508, by striking ‘‘or’’ at

12 the end,

13 (vi) in paragraph (16), as added by

14 Public Law 101–508—

15 (I) by striking ‘‘(20 U.S.C. 1001

16 et seq.)’’, and

17 (II) by striking the period at the

18 end and inserting a semicolon, and

19 (vii) in paragraph (14), as added by

20 Public Law 101–311—

21 (I) by striking the period at the

22 end and inserting ‘‘; or’’,

23 (II) by redesignating such para24 graph as paragraph (17), and
98

•HR 5116 RH

1 (III) by transferring such para2 graph so as to insert such paragraph

3 after paragraph (16),

4 (8) in section 363—

5 (A) in subsection (b)(2) by striking ‘‘(15

6 U.S.C. 18a)’’, and

7 (B) in subsection (c)(1) by striking ‘‘1304,

8 1203, or 1204’’ and inserting ‘‘1203, 1204, or

9 1304’’,

10 (9) in section 364—

11 (A) in subsection (a) by striking ‘‘1304,

12 1203, or 1204’’ and inserting ‘‘1203, 1204, or

13 1304’’, and

14 (B) in subsection (f)—

15 (i) by striking ‘‘(15 U.S.C. 77e)’’, and

16 (ii) by striking ‘‘(15 U.S.C. 77aaa et

17 seq.)’’,

18 (10) in section 365—

19 (A) in subsection (d)(6)(C) by striking ‘‘the

20 Federal Aviation Act of 1958 (49 U.S.C. 1301)’’

21 and inserting ‘‘section 40102 of title 49’’,

22 (B) in subparagraphs (A) and (B) of sub23 section (g)(2) by striking ‘‘1307, or 1208’’ each

24 place it appears and inserting ‘‘1208, or 1307’’,
99

•HR 5116 RH

1 (C) in subsection (n)(1)(B) by striking ‘‘to

2 to’’ and inserting ‘‘to’’,

3 (D) in subsection (o) by striking ‘‘the Fed4 eral’’ the first place it appears and all that fol5 lows through ‘‘successors,’’, and inserting ‘‘a Fed6 eral depository institutions regulatory agency (or

7 predecessor to such agency)’’, and

8 (E) by striking subsection (p),

9 (11) in section 507—

10 (A) in subsection (a)(9), as so redesignated

11 by section 304, by striking ‘‘the Federal’’ the

12 first place it appears and all that follows

13 through ‘‘successors,’’, and inserting ‘‘a Federal

14 depository institutions regulatory agency (or

15 predecessor to such agency)’’, and

16 (B) in subsection (d) by striking ‘‘or (a)(6)’’

17 and inserting ‘‘(a)(6), (a)(7), (a)(8), or (a)(9)’’,

18 (12) in section 522(d)(10)(E)(iii)—

19 (A) by striking ‘‘408, or 409’’ the first place

20 it appears and inserting ‘‘or 408’’, and

21 (B) by striking ‘‘Internal Revenue Code of

22 1954 (26 U.S.C. 401(a), 403(a), 403(b), 408, or

23 409)’’ and inserting ‘‘Internal Revenue Code of

24 1986’’,

25 (13) in section 523—
100

•HR 5116 RH

1 (A) in subsection (a)—

2 (i) by striking ‘‘1141,,’’ and inserting

3 ‘‘1141,’’, and

4 (ii) in paragraph (2)(C) by striking

5 ‘‘(15 U.S.C. 1601 et seq.)’’,

6 (B) in subsection (b)—

7 (i) by striking ‘‘(20 U.S.C. 1087-3)’’,

8 and

9 (ii) by striking ‘‘(42 U.S.C. 294f)’’,

10 and

11 (C) in subsection (e) by striking ‘‘depository

12 institution or insured credit union’’ and insert13 ing ‘‘insured depository institution’’,

14 (14) in section 524—

15 (A) in subsection (a)(3) by striking ‘‘or

16 1328(c)(1)’’ and inserting ‘‘, 1228(a)(1), or

17 1328(a)(1)’’,

18 (B) in subsection (c)(4) by striking

19 ‘‘recission’’ and inserting ‘‘rescission’’, and

20 (C) in subsection (d)(1)(B)(ii) by adding

21 ‘‘and’’ at the end,

22 (15) in section 525(a)—

23 (A) by striking ‘‘(7 U.S.C. 499a-499s)’’,

24 (B) by striking ‘‘(7 U.S.C. 181-229)’’, and
101

•HR 5116 RH

1 (C) by striking ‘‘(57 Stat. 422; 7 U.S.C.

2 204)’’,

3 (16) in section 542(e) by striking ‘‘to to’’ and in4 serting ‘‘to’’,

5 (17) in section 543(d)(1) by striking ‘‘section,’’

6 and inserting ‘‘section’’,

7 (18) in section 549(b) inserting ‘‘the trustee may

8 not avoid under subsection (a) of this section’’ after

9 ‘‘involuntary case,’’,

10 (19) in section 553—

11 (A) in subsection (a)(1) by striking ‘‘other

12 than under section 502(b)(3) of this title’’, and

13 (B) in subsection (b)(1) by striking

14 ‘‘362(b)(14),,’’ and inserting ‘‘362(b)(14),’’,

15 (20) in section 555 by striking ‘‘(15 U.S.C.

16 78aaa et seq.)’’,

17 (21) in section 559 by striking ‘‘(15 U.S.C.

18 78aaa et seq.)’’,

19 (22) in section 706(a) by striking ‘‘1307, or

20 1208’’ and inserting ‘‘1208, or 1307’’,

21 (23) in section 724(d) by striking ‘‘Internal Rev22 enue Code of 1954 (26 U.S.C. 6323)’’ and inserting

23 ‘‘Internal Revenue Code of 1986’’,

24 (24) in section 726(b)—
102

•HR 5116 RH

1 (A) inserting a comma after ‘‘section 1112’’,

2 and

3 (B) by inserting ‘‘1009,’’ after ‘‘chapter

4 under section’’,

5 (25) in section 741(4)(A)(iii) by striking ‘‘(15

6 U.S.C. 78a et seq.)’’,

7 (26) in section 742 by striking ‘‘(15 U.S.C.

8 78aaa et seq.)’’,

9 (27) in section 743 by striking ‘‘342(a)’’ and in10 serting ‘‘342’’,

11 (28) in section 745(c) by striking ‘‘Internal Rev12 enue Code of 1954 (26 U.S.C. 1 et seq.)’’ and insert13 ing ‘‘Internal Revenue Code of 1986’’,

14 (29) in section 761—

15 (A) in paragraph (1) by striking ‘‘(7 U.S.C.

16 1 et seq.)’’,

17 (B) in paragraph (5) by striking ‘‘(7 U.S.C.

18 6c(b))’’, and

19 (C) in paragraph (13) by striking ‘‘(7

20 U.S.C. 23)’’,

21 (30) in section 1104(d), as so redesignated by

22 section 211, inserting a comma after ‘‘interest’’,

23 (31) in section 1123(a)(1) inserting a comma

24 after ‘‘title’’ the last place it appears,

25 (32) in section 1129—
103

•HR 5116 RH

1 (A) in subsection (a)—

2 (i) in paragraph (4) by striking the

3 semicolon at the end and inserting a period,

4 and

5 (ii) in paragraph (12) inserting ‘‘of

6 title 28’’ after ‘‘section 1930’’, and

7 (B) in subsection (d) by striking ‘‘(15

8 U.S.C. 77e)’’,

9 (33) in section 1145—

10 (A) in subsection (a)—

11 (i) by striking ‘‘does’’ and inserting

12 ‘‘do’’,

13 (ii) by striking ‘‘(15 U.S.C. 77e)’’, and

14 (iii) in paragraph (3)(B)(i) by strik15 ing ‘‘(15 U.S.C. 78m or 78o(d))’’,

16 (B) in subsection (b)(1) by striking ‘‘(15

17 U.S.C. 77b(11))’’, and

18 (C) in subsection (d) by striking ‘‘(15

19 U.S.C. 77aaa et seq.)’’,

20 (34) in section 1166(2) by striking ‘‘(45 U.S.C.

21 791(b))’’,

22 (35) in section 1167—

23 (A) by striking ‘‘(45 U.S.C. 151 et seq.)’’,

24 and

25 (B) by striking ‘‘(45 U.S.C. 156)’’,
104

•HR 5116 RH

1 (36) in section 1226(b)(2)—

2 (A) by striking ‘‘1202(d)’’ and inserting

3 ‘‘1202(c)’’, and

4 (B) by striking ‘‘1202(e)’’ and inserting

5 ‘‘1202(d)’’,

6 (37) in section 1302(b)(3) by striking ‘‘and’’ at

7 the end, and

8 (38) in section 1328(a)—

9 (A) in paragraph (2) by striking ‘‘(5) or

10 (8)’’ and inserting ‘‘(5), (8), or (9)’’, and

11 (B) by striking the last paragraph (3), and

12 (39) in the table of chapters by striking the item

13 relating to chapter 15.

14 SEC. 502. TITLE 28 OF THE UNITED STATES CODE.

15 Section 586(a)(3) of title 28, United States Code, is

16 amended in the matter preceding subparagraph (A) by in17 serting ‘‘12,’’ after ‘‘11,’’.

18 TITLE VI—BANKRUPTCY REVIEW

19 COMMISSION

20 SEC. 601. SHORT TITLE.

21 This title may be cited as the ‘‘National Bankruptcy

22 Review Commission Act’’.

23 SEC. 602. ESTABLISHMENT.

24 There is established the National Bankruptcy Review

25 Commission (referred to as the ‘‘Commission’’).
105

•HR 5116 RH

1 SEC. 603. DUTIES OF THE COMMISSION.

2 The duties of the Commission are—

3 (1) to investigate and study issues and problems

4 relating to title 11, United States Code (commonly

5 known as the ‘‘Bankruptcy Code’’);

6 (2) to evaluate the advisability of proposals and

7 current arrangements with respect to such issues and

8 problems;

9 (3) to prepare and submit to the Congress, the

10 Chief Justice, and the President a report in accord11 ance with section 608; and

12 (4) to solicit divergent views of all parties con13 cerned with the operation of the bankruptcy system.

14 SEC. 604. MEMBERSHIP.

15 (a) NUMBER AND APPOINTMENT.—The Commission

16 shall be composed of 9 members as follows:

17 (1) Three members appointed by the President, 1

18 of whom shall be designated as chairman by the

19 President.

20 (2) One member shall be appointed by the Presi21 dent pro tempore of the Senate.

22 (3) One member shall be appointed by the Mi23 nority Leader of the Senate.

24 (4) One member shall be appointed by the

25 Speaker of the House of Representatives.
106

•HR 5116 RH

1 (5) One member shall be appointed by the Mi2 nority Leader of the House of Representatives.

3 (6) Two members appointed by the Chief Justice.

4 Members of Congress shall be ineligible for appointment to

5 the Commission.

6 (b) TERM.—Members of the Commission shall be ap7 pointed for the life of the Commission.

8 (c) QUORUM.—Five members of the Commission shall

9 constitute a quorum, but a lesser number may conduct

10 meetings.

11 (d) APPOINTMENT DEADLINE.—The first appoint12 ments made under subsection (a) shall be made within 60

13 days after the date of enactment of this Act.

14 (e) FIRST MEETING.—The first meeting of the Com15 mission shall be called by the chairman and shall be held

16 within 210 days after the date of enactment of this Act.

17 (f) VACANCY.—A vacancy on the Commission resulting

18 from the death or resignation of a member shall not affect

19 its powers and shall be filled in the same manner in which

20 the original appointment was made.

21 (g) CONTINUATION OF MEMBERSHIP.—If any member

22 of the Commission who was appointed to the Commission

23 as a member of Congress or as an officer or employee of

24 a government leaves that office, or if any member of the

25 Commission who was not appointed in such a capacity be-
107

•HR 5116 RH

1 comes an officer or employee of a government, the member

2 may continue as a member of the Commission for not longer

3 than the 90-day period beginning on the date the member

4 leaves that office or becomes such an officer or employee,

5 as the case may be.

6 (h) CONSULTATION PRIOR TO APPOINTMENT.—Prior

7 to the appointment of members of the Commission, the

8 President, the President pro tempore of the Senate, the

9 Speaker of the House of Representatives, and the Chief Jus10 tice shall consult with each other to ensure fair and equi11 table representation of various points of view in the Com12 mission and its staff.

13 SEC. 605. COMPENSATION OF THE COMMISSION.

14 (a) PAY.—

15 (1) NONGOVERNMENT EMPLOYEES.—Each mem16 ber of the Commission who is not otherwise employed

17 by the United States Government shall be entitled to

18 receive the daily equivalent of the annual rate of basic

19 pay payable for level IV of the Executive Schedule

20 under section 5315 of title 5, United States Code, for

21 each day (including travel time) during which he or

22 she is engaged in the actual performance of duties as

23 a member of the Commission.

24 (2) GOVERNMENT EMPLOYEES.—A member of the

25 Commission who is an officer or employee of the
108

•HR 5116 RH

1 United States Government shall serve without addi2 tional compensation.

3 (b) TRAVEL.—Members of the Commission shall be re4 imbursed for travel, subsistence, and other necessary ex5 penses incurred by them in the performance of their duties.

6 SEC. 606. STAFF OF COMMISSION; EXPERTS AND CONSULT7 ANTS.

8 (a) STAFF.—

9 (1) APPOINTMENT.—The chairman of the Com10 mission may, without regard to the civil service laws

11 and regulations, appoint, and terminate an executive

12 director and such other personnel as are necessary to

13 enable the Commission to perform its duties. The em14 ployment of an executive director shall be subject to

15 confirmation by the Commission.

16 (2) COMPENSATION.—The chairman of the Com17 mission may fix the compensation of the executive di18 rector and other personnel without regard to the pro19 visions of chapter 51 and subchapter II of chapter 53

20 of title 5, United States Code, relating to classifica21 tion of positions and General Schedule pay rates, ex22 cept that the rate of pay for the executive director and

23 other personnel may not exceed the rate payable for

24 level V of the Executive Schedule under section 5316

25 of that title.
109

•HR 5116 RH

1 (b) EXPERTS AND CONSULTANTS.—The Commission

2 may procure temporary and intermittent services of experts

3 and consultants under section 3109(b) of title 5, United

4 States Code.

5 SEC. 607. POWERS OF THE COMMISSION.

6 (a) HEARINGS AND MEETINGS.—The Commission or,

7 on authorization of the Commission, a member of the Com8 mission, may hold such hearings, sit and act at such time

9 and places, take such testimony, and receive such evidence,

10 as the Commission considers appropriate. The Commission

11 or a member of the Commission may administer oaths or

12 affirmations to witnesses appearing before it.

13 (b) OFFICIAL DATA.—The Commission may secure di14 rectly from any Federal department, agency, or court infor15 mation necessary to enable it to carry out this title. Upon

16 request of the chairman of the Commission, the head of a

17 Federal department or agency or chief judge of a Federal

18 court shall furnish such information, consistent with law,

19 to the Commission.

20 (c) FACILITIES AND SUPPORT SERVICES.—The Ad21 ministrator of General Services shall provide to the Com22 mission on a reimbursable basis such facilities and support

23 services as the Commission may request. Upon request of

24 the Commission, the head of a Federal department or agen25 cy may make any of the facilities or services of the agency
110

•HR 5116 RH

1 available to the Commission to assist the Commission in

2 carrying out its duties under this title.

3 (d) EXPENDITURES AND CONTRACTS.—The Commis4 sion or, on authorization of the Commission, a member of

5 the Commission may make expenditures and enter into con6 tracts for the procurement of such supplies, services, and

7 property as the Commission or member considers appro8 priate for the purposes of carrying out the duties of the

9 Commission. Such expenditures and contracts may be made

10 only to such extent or in such amounts as are provided in

11 appropriation Acts.

12 (e) MAILS.—The Commission may use the United

13 States mails in the same manner and under the same condi14 tions as other Federal departments and agencies of the

15 United States.

16 (f) GIFTS.—The Commission may accept, use, and dis17 pose of gifts or donations of services or property.

18 SEC. 608. REPORT.

19 The Commission shall submit to the Congress, the Chief

20 Justice, and the President a report not later than 2 years

21 after the date of its first meeting. The report shall contain

22 a detailed statement of the findings and conclusions of the

23 Commission, together with its recommendations for such

24 legislative or administrative action as it considers appro25 priate.
111

•HR 5116 RH

1 SEC. 609. TERMINATION.

2 The Commission shall cease to exist on the date that

3 is 30 days after the date on which it submits its report

4 under section 608.

5 SEC. 610. AUTHORIZATION OF APPROPRIATIONS.

6 There is authorized to be appropriated $1,500,000 to

7 carry out this title.

8 TITLE VII—SEVERABILITY; EF9 FECTIVE DATE; APPLICATION

10 OF AMENDMENTS.

11 SEC. 701. SEVERABILITY.

12 If any provision of this Act or amendment made by

13 this Act or the application of such provision or amendment

14 to any person or circumstance is held to be unconstitu15 tional, the remaining provisions of and amendments made

16 by this Act and the application of such other provisions

17 and amendments to any person or circumstance shall not

18 be affected thereby.

19 SEC. 702. EFFECTIVE DATE; APPLICATION OF AMEND20 MENTS.

21 (a) EFFECTIVE DATE.—Except as provided in sub22 section (b), this Act shall take effect on the date of the enact23 ment of this Act.

24 (b) APPLICATION OF AMENDMENTS.—(1) Except as

25 provided in paragraph (2), the amendments made by this

26 Act shall not apply with respect to cases commenced under
112

•HR 5116 RH

1 title 11 of the United States Code before the date of the en2 actment of this Act, and shall not make appealable any de3 cisions rendered in such cases.

4 (2)(A) Paragraph (1) shall not apply with respect to

5 the amendment made by section 111.

6 (B) The amendment made by section 113 shall apply

7 with respect to cases commenced under title 11 of the United

8 States Code before, on, and after the date of the enactment

9 of this Act.

10 (C) Section 1110 of title 11, United States Code, as

11 amended by section 201 of this Act, shall apply with respect

12 to any lease, as defined in such section 1110(c) as so amend13 ed, entered into in connection with a settlement of any pro14 ceeding in any case pending under title 11 of the United

15 States Code on the date of the enactment of this Act.

16 (D) The amendments made by section 306 shall apply

17 only to agreements entered into after the date of enactment

18 of this Act.

HR 5116 RH——2

HR 5116 RH——3

HR 5116 RH——4

HR 5116 RH——5

HR 5116 RH——6

HR 5116 RH——7

HR 5116 RH——8
113

•HR 5116 RH

HR 5116 RH——9